ANNUAL

REPORT

2010
COMPANY PROFILE

BOARD OF DIRECTOR
CHAIRMAN : MR. MOHAMMAD ABDULLAH

MANAGEMENT CONSULTANT : M. YOUSUF ADIL SALEEM & COMPANY CHARTERED ACCOUNTANTS

CHIEF EXECUTIVE : MR. NADEEM ABDULLAH

TAX CONSULTANTS : MUSHTAQ & COMPANY CHARTERED ACCOUNTANTS

DIRECTOR : MR. SHAHID ABDULLAH MR. AMER ABDULLAH MR. YOUSUF ABDULLAH MR. MOHAMMAD YOUNUS MR. MOHAMMAD YAMIN BANKERS : HABIB BANK LIMITED CITI BANK N.A. AUDIT COMMITTEE CHAIRMAN : MR. SHAHID ABDULLAH MEMBER : MR. YOUSUF ABDULLAH MR. MOHAMMAD YAMIN REGISTERED OFFICE: 212, COTTON EXCHANGE BUILDING, I.I.CHUNDRIGAR ROAD, KARACHI. CHIEF FINANCIAL OFFICER : MR. ABDUL SATTAR MILLS : S.I.T.E KOTRI COMPANY SECRETARY : MR. ZEESHAN S.I.T.E NOORIABAD CHUNIAN, DISTRICT KASUR FEROZE WATWAN, AUDITORS : MUSHTAQ & COMPANY CHARTERED ACCOUNTANTS BHOPATTIAN, LAHORE. STANDARD CHARTERED BANK UNITED BANK LIMITED MCB BANK LIMITED LEGAL ADVISIOR : A.K. BROHI & COMPANY

SHARE REGISTRARS : HAMEED MAJEED ASSOCIATES (PVT) LTD., 5TH FLOOR, KARACHI CHAMBERS, HASRAT MOHANI ROAD, KARACHI.

Sapphire Textile Mills Limited

2

ANNUAL

REPORT

2010

Vision
To be one of the premier textile company recognized for leadership in technology, flexibility, responsiveness and quality. Our customers will share in our success through innovative manufacturing, certifiable quality, exceptional services and creative alliances. Structured to maintain in depth competence and knowledge about our business, our customers and worldwide markets. Our workforce will be the most efficient in industry through multiple skill learning, the fostering of learning and the fostering of teamwork and the security of the safest work environment possible recognised as excellent citizen in the local and regional community through our financial and human resources support and our sensitivity to the environment.

Mission
Sapphire Textile Mills Limited

Our mission is to be recognised as premier supplier to the

markets we serve by providing quality yarns, fabrics and other textile products to satisfy the needs of our customers. Our mission will be accomplished through excellence in customer service, sales and manufacturing supported by teamwork of all associates. We will continue our tradition of honesty, fairness and integrity in relationship with our customers, associates, shareholders, community and stakeholders. 3

ANNUAL

REPORT

2010

Vision
To be one of the premier textile company recognized for leadership in technology, flexibility, responsiveness and quality. Our customers will share in our success through innovative manufacturing, certifiable quality, exceptional services and creative alliances. Structured to maintain in depth competence and knowledge about our business, our customers and worldwide markets. Our workforce will be the most efficient in industry through multiple skill learning, the fostering of learning and the fostering of teamwork and the security of the safest work environment possible recognised as excellent citizen in the local and regional community through our financial and human resources support and our sensitivity to the environment.

Mission
Sapphire Textile Mills Limited

Our mission is to be recognised as premier supplier to the

markets we serve by providing quality yarns, fabrics and other textile products to satisfy the needs of our customers. Our mission will be accomplished through excellence in customer service, sales and manufacturing supported by teamwork of all associates. We will continue our tradition of honesty, fairness and integrity in relationship with our customers, associates, shareholders, community and stakeholders. 3

consider and adopt the Audited Accounts together with Directors’ and Auditors’ Reports for the year ended 30th June. 2010 (both days inclusive). 4. 2010. for identification purpose. 2010 at 11:45 a. 2.Chundrigar Road. To appoint auditors for the year ending 30th June.I. 3. Dated : 06th October.ANNUAL REPORT 2010 NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN THAT 42nd Annual General Meeting of SAPPHIRE TEXTILE MILLS LIMITED will be held on Thursday the 28th day of October. 4. Sapphire Textile Mills Limited 4 . 2010. Transfers received in order. numbers and account numbers in CDS. will be considered in time for the payment of dividend. and in case of proxy. By Order of the Board (ZEESHAN) Secretary Karachi. I. 2010 to 28th October.D. Cotton Exchange Building. 2. 5. Karachi. to enclose an attested copy of his/her National Identity Card. The share transfer books of the Company shall remain closed for entitlement of Dividend from 22nd October. by the Hameed Majeed Associates (Private) Limited. CDC shareholders desiring to attend the meeting are requested to bring their original National Identity Cards. 3. Proxies in order. 2011 and fix their remuneration. The present Auditors. Hasrat Mohani Road. To confirm the minutes of the 41st Annual General Meeting. Chartered Accountants retire and being eligible offer themselves for reappointment. To approve dividend as recommended by the Board of Directors. at 212. To receive. Account/Sub Account and particular of participants I. Karachi to transact the following business: ORDINARY BUSINESS 1.m. Karachi Chambers. to be valid must be deposited at the Registered Office of the Company not less than 48 hours before the time of the meeting. A member entitled to attend and vote at this meeting may appoint another member as his/her proxy to attend and vote on his/her behalf. M/s Mushtaq & Company. 5th Floor. To transact any other business with the permission of the Chair. 2010 NOTES 1. up to 21st October. Shareholders are requested to notify the Company of any change in their addresses.

50. 2010. as cotton had been purchased at lower levels.11.731.736. Appropriation of Profit Rupess In Thousand Profit Before Taxation Less: Taxation Profit after taxation Add: Unappropriated profit brought forward Profit available for appropriation Appropriations Proposed cash dividend @ 50% (2009 15%) Unappropirated profit carried forward DIVIDEND The Board of Directors of the company is pleased to recommend a cash dividend of 50% for the year ended June 30.015.015.064 179.544 11. which means a 22.24% of sales compared to 55.854 1. The company was also able to cross the Rs.614 1.150. FINANCIAL HIGHLIGHTS Rupees in Thousand 2010 2009 Sales & Services Gross Profit Profit from Operations Other Opeating Income Profit before taxation Profit after taxation 14. there was greater emphasis on exports.428 billion from Rs. The Major factor was cotton prices and consequently the yarn prices increased substantially during the year.14.744.96% of sales compared to 14. In addition.416 4.834 153.55% in the pervious year.374 120.10 billion export mark in the current Year. 1.119 million on account of receivables in the local market and efforts are under way for recovery of this amount. EARNING PER SHARE The earning per share on June 30.048 920. The over all sales increased to Rs. The export sales were 72.115.74% in the pervious year. The company has also made a provision for bad debts of Rs.049.134. which resulted in high profit margin.57 as compared to Rs.230 274.115.248 1. 2010 (2009:15%). 2010 was Rs.759 194.842 REVIEW OF OPERATIONS The year under review was a year of record profitability.85% increased. 2009.744 billion in the previous year.95 on June 30.070) 1.522 4.8.650 Sapphire Textile Mills Limited 5 .ANNUAL REPORT 2010 DIRECTOR’S REPORT to the Shareholders The Directors of Sapphire Textile Mills Limited have pleasure in presenting their Report together with the audited financial statements of the Company for the year ended June 30.428.081 2.614 (100.066 100.544 3. The gross profit in the current year was 18.

have been followed in preparation of financial statements. as applicable in Pakistan. 1372 acres of land has been allocated. The Company is wholly owned subsidiary of Sapphire Textile Mills Limited.: The Company is incorporated in United State of America. 3. present fairly its state of affairs. duties. 3. Sapphire Renewable Solutions (Private) Limited: The management of the company is planning to close the business of the company. Other benefit remain unchanged. Further the technical feasibility has been approved by AEDB and bankable documents will be submitted to financial Institution shortly.and Director Mr. Sapphire Holding Company: The Company is an unlisted public limited company incorporated in Pakistan on April 21st. The system of internal control.Sapphire Finishing Mills Limited to Sapphire Holding Company. STATEMENT ON CORPORATE AND FINANCIAL REPORTING FRAME WORK The Board of Directors periodically reviews the Company's strategic direction.ANNUAL REPORT 2010 FUTURE PROSPECTS Flooding in various parts of the country has adversely affected size of the cotton corp. is being continuously reviewed by the internal audit and other such procedures. Sapphire Wind Power Company Limited: The Company is under implementation stage. the result of its operations. sub-lease document has been signed with the Alternative Energy Development Board. which includes house rent and utilities. 2010. 2010 under The Companies Ordinance. However management is striving its best for achieving good results in coming year. for setting-up of 50 MW Wind Energy project. All liabilities in regard to the payment on account of taxes. The company is principally engaged in marketing services in United State of America. The process of review and monitoring will continue with the object to improve it further. This will remain a serious challenge to the textile industry particularly in Pakistan. In addition the international prices of cotton are very high.f July 01.Diamond Fabrics Limited and M/s. 1984 as wholly owned subsidiary of Sapphire Textile Mills Limited.000/. 2010. Sapphire Textile Mills Limited 6 . The Board has reviewed the Code of Corporate Governance and confirms that: 1.e. levies and charges have been fully 6.750. The principal object of forming this company is de-merger of Sapphire Textile Mills Limited by transferring the Investments in M/s. M/s. Sapphire Home Inc.per month. The Mast (Wind Turbine Power Performance Testing instrument) has been installed at the project. 1. International Accounting Standards. 5. Appropriate accounting policies have been consistently applied in preparation of financial statements and accounting estimates are based on reasonable and prudent judgment. The Board is committed to maintain a high standard of corporate governance. cash flow and changes in equity. which was in place. Another factor which may affect the profitability of the company is the imposition of additional taxes and withdrawal of zero rating for cotton and textile products.Mohammad Abdullah to Rs.Sapphire Fibres Limited. SUBSIDIARIES OF SAPPHIRE TEXTILE MILLS LIMITED There are four 100% subsidiaries of Sapphire Textile Mills Limited. This may result in huge liquidity problems for exporters as the sales tax refund mechanism is very slow and inefficient. The financial statements. 2. Mr.Nadeem Abdullah to Rs. The company has maintained proper books of accounts. 4. w. In addition the increased load shedding of gas for power generation and increased energy prices coupled with high interest rate may affect the profitability in the future. Nadeem Abdullah Director of company has filed the application under Companies Easy Exit Scheme on 3rd September. Business plans and targets are set by the Chief Executive and reviewed by the Board. Therefore. 2.000/. REMUNERATION OF CHIEF EXECUTIVE AND DIRECTOR The Board of Directors has revised the monthly remuneration of Chief Executive of the Company Mr. prepared by the management of the Company. 4.500.

7. 11. On behalf of the Board NADEEM ABDULLAH CHIEF EXECUTIVE Karachi Dated : 6th October. Muahmmad Abdullah Mr. Attendance by each Director is as follow: Mr. No trade in the shares of the Company were carried out by the Directors. The Board in compliance to the Code of Corporate Governance has established an Audit Committee and the following directors are its members: Mr. Muahmmad Yamin 10. 9. Provision has been made in the accounts accordingly. Chief Executive Officer. 1984. Code of Ethics and Business Practices has been developed and are communicated and acknowledged by each Director and employee of the company PATTERN OF SHAREHOLDING: The Pattern of share holding of the company as at June 30. 2005 which is initially for the Head office and will gradually applicable to the other units/mills of the Company. offer themselves for re-appointment for the year 2010-2011. There in no doubt about the company's ability to continue as a going concern. Audit Committee and Board of Directors have also recommended their appointment as Auditor for the year ended June 30. their spouses and minor children. M/s. 2006. Yousuf Abdullah Mr.ANNUAL REPORT 2010 provided and will be paid in due course or where claim was not acknowledged as debt the same is disclosed as contingent liabilities in the notes to the accounts. 14. AUDITORS: The present Auditors. 8. shareholders. as detailed in listing regulations. Yousuf Abdullah Mr. Nadeem Abdullah Mr. There has been no material departure form the best practice of corporate governance. Shahid Abdullah Mr. The Company established Management Staff Gratuity Fund from July 1. This statement is prepared in accordance with the Code of Corporate Governance and the Companies Ordinance. 2010 is annexed.Mushtaq & Company (Chartered Accountants) retires and being eligible. The company has also introduced Employees' Provident Fund for the staff from July 1. suppliers and dedication and hard work of the Staff and Workers. financial institutions. customers. Shahid Abdullah Mr. Chief financial Officer. Amer Abdullah Mr. The persons join the Provident Fund will not be eligible for gratuity fund. regulatory authorities. Company Secretary. 2010 Sapphire Textile Mills Limited 7 . ACKNOWLEDGMENT The Management would like to place on record its appreciation for the support of Board of Directors. Mohammad Younus Mr. Chairman Member Member Operating and financial data and key ratios of six years are annexed. During the Year =18= meetings of the Board of Directors were held. 13. Mohammad Yamin 16 14 16 14 14 13 13 12. 2011.

08 30.709 1091.37 Sapphire Textile Mills Limited 8 .86 2.70 1.000 2006 8292.09:1 0.25 3.42 1.73 1.12 0.081 2736.66:1 0.966 50.027 670.09 0.73 7.03 0.ANNUAL REPORT 2010 SIX YEAR GROWTH AT A GLANCE (Rupees in Million) YEARS Sales Gross Profit Profit Before Tax Profit After Tax Share Capital Shareholder's Equity Fixed Assets .31 1.28:1 0.600 617.390 12.96 7.76 13.525 15.842 200.95 50.21:1 0. 1.86 6.E-Before Tax R.16 1.49 2.07 1.064 179.492 4214.374 274. Break up value per share Times Times Times Rs.831 2797.203 319.000 2008 9769.456 1191.65 10.31 3.813 11579.O.265 7.08 1.000 - % % % % % Rs.179 9218.598 10189.346 7317.04 18.36 5.36 1.Net Total Assets DIVIDEND .004 15.62 139.000 2009 11744.500 2007 9152.921 15.544 200.77 9.831 6018.831 5992.928 3926.27 Times Times 1.15 5.45 6.500 4.57 14.62 16.613 1015.72 1.459 134.55 6.322 1128.74 2.19:1 0.500 2005 5586.89 1.868 4104.P.32 0.61 % % 2010 14428.58 1.773 200.E After Tax Basic E. 18.673 288.23 0.248 1731.93 298.718 12324.28 222.21:1 0.87 0.857 4092.03 8.263 200.114 3294.32 12.59 10.79 2.708 216.85 299.730 200.048 1115.02 11.831 3893.32 7.070 4029.S-After Tax Activity Sales To Total Assets Sales To Fixed Assets Liquidity/Leverage Current Ratio Debt Equity Ratio Total Liabilities to Equity.15 2.36 193.Cash DIVIDEND .O.41 13.32 14.21 277.842 11126.82 2.60 3.193 381.69 6.15 4.173 263.33 1.70 11.Specie RATIOS: Profitability Gross Profit Profit Before Tax Profit After Tax Return To Shareholders R.53 6.831 5577.831 4459.02 3.76 3.24 1.722 852.95 11.535 200.

Dated: October 6. We have not carried out any special review of the internal control system to enable us to express an opinion as to whether the Board’s statement on internal control covers all controls and the effectiveness of such internal controls.ANNUAL REPORT 2010 REVIEW REPORT TO THE MEMBERS on statement of compliance with best practices of code of corporate governance We have reviewed the Statement of Compliance with the best practices contained in the Code of Corporate Governance prepared by the Board of Directors of Sapphire Textile Mills Limited to comply with the Listing Regulation No. whether the Statement of Compliance reflects the status of the company’s compliance with the provisions of the Code of Corporate Governance and report if it does not. with the best practices contained in the Code of Corporate Governance as applicable to the company for the year ended June 30. 2010 MUSHTAQ & COMPANY Chartered Accountants Engagement Partner: Shahabuddin A. A review is limited primarily to inquiries of the company personnel and review of various documents prepared by the company to comply with the Code. The responsibility for compliance with the Code of Corporate Governance is that of the Board of Directors of the company. Our responsibility is to review. to the extent where such compliance can be objectively verified. 2010. As part of our audit of financial statements we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. Siddiqui Sapphire Textile Mills Limited 9 . 37 of the Karachi Stock Exchange (Guarantee) Limited where the company is listed. Based on our review. in all material respects. nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the company’s compliance. Karachi.

16. The meetings of the Audit Committee were held at least once every quarter prior to approval of interim and final results of the Company and as required by the Code. 3. along with agenda and working papers. The Board has set up an effective Internal Audit Function. were circulated at least seven days before the meetings. It comprises three members. 11. whereby a listed company is managed in compliance with the best practices of corporate governance. 15. The Board has developed a vision/mission statement. The Board arranged one orientation course for its directors during the year to apprise them of their duties and responsibilities and briefed them regarding amendments in the Companies Ordinance/ Corporate Laws. including this company. 4. The financial statements of the Company were duly endorsed by CEO and CFO before approval of the Board. 14. All the power of Board have been duly exercised and decisions on material transactions. The Directors have declared that all the resident Directors of the Company are registered as taxpayers and none of them has defaulted in payment of any loan to a banking company. There was no new appointment of CFO/Company Secretary during the year. 6. have been taken by the Board. The terms of reference of the committee have been prepared in the light of the Code of Corporate Governance and advised to the Committee for compliance. The Company has complied with all the corporate and financial reporting requirements of the Code. The minutes of the meetings were appropriately recorded and circulated in time. 9. The company has applied the principles contained in the Code in the following manner: 1. The Directors have confirmed that none of them is serving as a director in more than ten listed companies. 2. During the year no casual vacancies occurred in the Board of Directors. 13. A complete record of particulars of significant polices along with the dates on which they were approved or amended has been maintained. 17. 5. The Directors’ Report for this year has been prepared in compliance with the requirements of the Code and fully describes the salient matters required to be disclosed. which has been signed by all the directors and employees of the company. The Directors. Sapphire Textile Mills Limited 10 . None of the Directors is a member of a stock exchange. The Board has formed an Audit Committee. overall corporate strategy and significant policies of the Company.ANNUAL REPORT 2010 STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE This statement is being presented to comply with the Code of Corporate Governance contained in Listing Regulations of the Stock Exchanges for the purpose of establishing a framework of good governance. 10. which were held during the year were presided by the Chairman and in his absence. of whom all are non-executive Directors. 8. 7. 12. The Company encourages representation of independent non-executive directors and directors representing minority interests on its Board of Directors. a DFI or a NBFI. At present the Board includes five non-executive Directors. Written notice of the Board meetings. The meetings of the Board. including appointment and determination of remuneration and terms and conditions of employment of the CEO and other Executive Directors. by a director elected by the Board for this purpose and Board met at least once in every Quarter. The Board have developed and adopted a ‘Statement of Ethics and Business Practice’. CEO and executives do not hold any interest in the shares of the Company other than that disclosed in the pattern of shareholding.

2010 For and on behalf of the Board NADEEM ABDULLAH CHIEF EXECUTIVE Sapphire Textile Mills Limited 11 . that they or any of the partners of the firm. Karachi Dated: 06th October. 19. The statutory auditors of the Company have confirmed that they have given a satisfactory rating under the quality control review program of the Institute of Chartered Accountants of Pakistan. In compliance with the requirements of Listing Regulation number 35 of the Karachi Stock Exchange (Guarantee) Limited. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the Listing Regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard. We confirm that all other material principles contained in the Code have been complied with. their spouses and minor children do not hold shares of the Company and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on Code of Ethics as adopted by Institute of Chartered Accountants of Pakistan.ANNUAL REPORT 2010 18. 21. 20. the related party transactions have been placed before the Audit Committee and approved by the Board of Directors.

Written notice of the Board meetings. overall corporate strategy and significant policies of the Company. The Board has developed a vision/mission statement. The Company has complied with all the corporate and financial reporting requirements of the Code. The company has applied the principles contained in the Code in the following manner: 1. The minutes of the meetings were appropriately recorded and circulated in time. have been taken by the Board. 11. which has been signed by all the directors and employees of the company. There was no new appointment of CFO/Company Secretary during the year. by a director elected by the Board for this purpose and Board met at least once in every Quarter. The Directors. CEO and executives do not hold any interest in the shares of the Company other than that disclosed in the pattern of shareholding.ANNUAL REPORT 2010 STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE This statement is being presented to comply with the Code of Corporate Governance contained in Listing Regulations of the Stock Exchanges for the purpose of establishing a framework of good governance. along with agenda and working papers. 14. 8. 5. including this company. None of the Directors is a member of a stock exchange. 7. 16. 12. During the year no casual vacancies occurred in the Board of Directors. 4. A complete record of particulars of significant polices along with the dates on which they were approved or amended has been maintained. 2. The Directors’ Report for this year has been prepared in compliance with the requirements of the Code and fully describes the salient matters required to be disclosed. 15. It comprises three members. At present the Board includes five non-executive Directors. The meetings of the Board. All the power of Board have been duly exercised and decisions on material transactions. 6. whereby a listed company is managed in compliance with the best practices of corporate governance. Sapphire Textile Mills Limited 10 . 13. The Directors have declared that all the resident Directors of the Company are registered as taxpayers and none of them has defaulted in payment of any loan to a banking company. The financial statements of the Company were duly endorsed by CEO and CFO before approval of the Board. The Board has set up an effective Internal Audit Function. The Company encourages representation of independent non-executive directors and directors representing minority interests on its Board of Directors. The Directors have confirmed that none of them is serving as a director in more than ten listed companies. 10. which were held during the year were presided by the Chairman and in his absence. The meetings of the Audit Committee were held at least once every quarter prior to approval of interim and final results of the Company and as required by the Code. were circulated at least seven days before the meetings. 17. including appointment and determination of remuneration and terms and conditions of employment of the CEO and other Executive Directors. The terms of reference of the committee have been prepared in the light of the Code of Corporate Governance and advised to the Committee for compliance. a DFI or a NBFI. The Board has formed an Audit Committee. 9. of whom all are non-executive Directors. 3. The Board have developed and adopted a ‘Statement of Ethics and Business Practice’. The Board arranged one orientation course for its directors during the year to apprise them of their duties and responsibilities and briefed them regarding amendments in the Companies Ordinance/ Corporate Laws.

that they or any of the partners of the firm. their spouses and minor children do not hold shares of the Company and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on Code of Ethics as adopted by Institute of Chartered Accountants of Pakistan. 21. 2010 For and on behalf of the Board NADEEM ABDULLAH CHIEF EXECUTIVE Sapphire Textile Mills Limited 11 . We confirm that all other material principles contained in the Code have been complied with. 19. 20. The statutory auditors of the Company have confirmed that they have given a satisfactory rating under the quality control review program of the Institute of Chartered Accountants of Pakistan. the related party transactions have been placed before the Audit Committee and approved by the Board of Directors. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the Listing Regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard. Karachi Dated: 06th October.ANNUAL REPORT 2010 18. In compliance with the requirements of Listing Regulation number 35 of the Karachi Stock Exchange (Guarantee) Limited.

Siddiqui Sapphire Textile Mills Limited 12 . in our opinion.ANNUAL REPORT 2010 AUDITOR’S REPORT to the Members We have audited the annexed Statement of financial position of Sapphire Textile Mills Limited as at June 30. Our responsibility is to express an opinion on these statements based on our audit. An audit also includes assessing the accounting policies and significant estimates made by the management. investments made and the expenditure incurred during the year were in accordance with the objects of the company. statement of comprehensive income. and are in agreement with the books of accounts and are further in accordance with accounting policies consistently applied. (d) Karachi. evidence supporting the amounts and disclosures in the above said statements. (a) in our opinion. 2010 and the related income statement. to the best of our knowledge and belief. 1984. (b) (ii) (iii) (c) in our opinion and to the best of our information and according to the explanations given to us. statement of comprehensive income. 2010 and of the profit. 1980 (XVIII of 1980) was deducted by the company and deposited in the Central Zakat Fund established under section 7 of that ordinance. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement. its cash flows and changes in equity for the year then ended. were necessary for the purpose of our audit. We believe that our audit provides a reasonable basis for our opinion and. income statement. An audit includes examining on a test basis. 1984. 1984. evaluating the overall presentation of the above said statements. after due verifications. the expenditure incurred during the year was for the purpose of the company’s business. we report that. and. (i) the statement of financial position and income statement account together with the notes thereon have been drawn up in conformity with the Companies Ordinance. statement of cash flow and statement of changes in equity together with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan. and prepare and present the above said statements in conformity with the approved accounting standards and the requirements of the Companies Ordinance. and the business conducted. statement of cash flows and statement of changes in equity together with the notes forming part thereof. give the information required by the Companies Ordinance. as well as. the statement of financial position. comprehensive income. Date: October 6. We conducted our audit in accordance with the auditing standards as applicable in Pakistan. It is the responsibility of the company's management to establish and maintain a system of internal control. and in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance. for the year then ended and we state that we have obtained all the information and explanations which. in the manner so required and respectively give a true and fair view of the state of the company’s affairs as at June 30. 2010 MUSHTAQ & COMPANY Chartered Accountants Engagement Partner: Shahabuddin A. proper books of accounts have been kept by the company as required by the Companies Ordinance. 1984.

000 200.405.454. 10 each Issued.938 NON CURRENT LIABILITIES Long term finances Deferred liabilities 19 20 544. 25 11.453.ANNUAL REPORT 2010 STATEMENT OF FINANCIAL POSITION AS AT JUNE 30.774 10. subscribed and paid-up capital Reserves 18 350.488 4.768 9.514 158.800.926 5.160.831.532 11.416 350.134 5.774.189.154 Contingencies and Commitments The annexed notes form an integral part of these financial statements.000.831.111.818.445.478.566.727.946.148.583 2010 Rupees 2009 Rupees CURRENT LIABILITIES Trade and other payables Accrued interest / mark-up Short term borrowings Current portion of long term finance Provision for taxation 21 22 23 19 24 671.367 360.613.357 398.525.217 5.909 490.000 200.874.336.044 5.239.433 228.152.879.665 TOTAL ASSETS EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES Authorized capital 35.314 23.859.965.296 155.264 20.628.672 4.400 4.992.000.294 702.856.354.187.700.000.025.301 120.899.152.837.859 74.927 904.732.259.348.682.966.137.920.003.037.721 CURRENT ASSETS Inventories Trade debts Loans and advances Trade deposits and short term prepayments Other receivables Other financial assets Income tax and sales tax Cash and bank balances 10 11 12 13 14 15 16 17 2.290 27.783 6.409 MOHAMMAD ABDULLAH Chairman / Director Karachi: Dated: 06th October.132 4.000 ordinary shares of Rs.918.918 184.522 1.068 9.337.035 46.154.647.459.239 199.579. plant and equipment Investment property Intangible assets Long term investments Long term loans and advances Long term deposits 4 5 6 7 8 9 3.194.845.996.521 3.423.448.416.714.251.710.028 140.592.791. 2010 Note NON CURRENT ASSETS Property.226 4.283 434.094 149.854.189.133 1.265.379 1.400 5.387.356.538 5.781.855 87.070.814 138.514.450 76.481.379 6.984.410 2.769.106.651.630 273.873 1.558 3.357 3.860 33.386 2.144.299 7.240.125.723.579.936 27.525.209.593.966.386 10. 2010 NADEEM ABDULLAH Chief Executive Sapphire Textile Mills Limited 13 .130.

706 33 (100.932.615.532.506.759.011.854.117 34 50.903.893) 179.602.038.207) 120.830 (847.069.425 (11.692.108 (10.031 274.428.032.033.390.230.227.305 1.ANNUAL REPORT 2010 INCOME STATEMENT FOR THE YEAR ENDED JUNE 30.736.787) (692.774) (262.544) (1.012.898.760 8.486 11.401 32 194.841.833.318) 920.221. MOHAMMAD ABDULLAH Chairman / Director Karachi: Dated: 06th October.95 28 29 (668.115. 2010 Note 2010 Rupees 2009 Rupees Sales and services Cost of sales and services Gross profit Selling and distribution expenses Administrative expenses 26 27 14.544.588 (573. 2010 NADEEM ABDULLAH Chief Executive Sapphire Textile Mills Limited 14 .653 (94.731.874.980) (803.048.744.373.57 The annexed notes form an integral part of these financial statements.613.015.063.972) (118.520) 1.774.622 153.149.365.939) 2.805.589) 1.081.866.767) 1.787) (135.903) (918.304) (70.719 Finance cost Other operating expenses Profit from operations Other operating income Profit before taxation Taxation Profit after taxation Earnings per share .759) 1.basic and diluted 30 31 (748.248.

1.116 (5.028.342.855) (1.498) (1.794.687. 2010 NADEEM ABDULLAH Chief Executive Sapphire Textile Mills Limited 15 .080) 546.485) MOHAMMAD ABDULLAH Chairman / Director Karachi: Dated: 06th October.117 179.841.999 1.544.273.957.845.519.339.544.071.369 (1. 2010 2010 Rupees 2009 Rupees Profit for the year after taxation Other comprehensive income: Unrealized gain / (loss) on remeasurement of available for sale investments Unrealized gain / (loss) on remeasurement of forward foreign currency contracts Unrealized (loss) on remeasurement of derivative financial instruments Other comprehensive income for the year Total comprehensive income/(loss) for the year The annexed notes form an integral part of these financial statements.248.760 549.251.ANNUAL REPORT 2010 STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED JUNE 30.290) 2.015.108 (1.245) (1.562.

052 430.210.938 82.558) (1.383) (1.069 10.080.970 148.400.576.201) (260.414.181.069.002.853.740) 3.159) (403.830.000) (16.848) (999.000 (261.119.877.632. plant and equipment Purchase of intangible assets Purchase of investment property Long term investment in associates Long term investment in subsidiary Long term investment in others other financial assets Proceeds from disposal of property. 2010 NADEEM ABDULLAH Chief Executive Sapphire Textile Mills Limited 16 .267.400.474) 1.669 13.138.836) (250.376.208 80.127 4.637.855.690) 400.707) 28.951) 115.469) (15.124.758) 18.050) 17.341 (32.448) (30.020.279.277.735) 2.119.946.755.566.900) (33.465.030.000 (228. 36 34.195.240 115.726 (178.366.570 270.029.076. plant and equipment Proceeds from sale of long term investment Proceeds from sale of other financial assets Proceeds from derivative financial instrument Dividend received from associates Dividend received from others Rental income Interest received Cash (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Short term borrowings Proceeds from long term finances Repayment of term finance Equity dividend paid 877.551 (291.126.401 MOHAMMAD ABDULLAH Chairman / Director Karachi: Dated: 06th October.019 (1.931 22.089) Cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property.000) (13.500) (113.349.ANNUAL REPORT 2010 STATEMENT OF CASH FLOW FOR THE YEAR ENDED JUNE 30.826.240 Net increase in cash and cash equivalents Net foreign exchange differences Cash and cash equivalent at the beginning of the year Cash and cash equivalent at the end of the year The annexed notes form an integral part of these financial statements.755.859) 82.891) (1.329.093.595 108.863.000.986 118.649) (37.987.013.288.918) (116.890 64.240.882) (899.919.320) (834.668) (14.071.624.661.882.946.500.714) (4.120) (530.428.899.778 (328.368.155.412 954.971.151.852 (439.012) (18.197) (95.513 (11.450 18.000.191.286) (71.025 (7. 2010 2010 Rupees 2009 Rupees Note CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations Long term loans and deposits Interest paid Gratuity paid Taxes paid 35 1.960.393 100.

2010 NADEEM ABDULLAH Chief Executive Sapphire Textile Mills Limited 17 .015.841.251.030.164.164.491. MOHAMMAD ABDULLAH Chairman / Director Karachi: Dated: 06th October.021 2.400 156.117 546.645.2009 Other comprehensive income for the year .532 179.592) 4.544.723 (45.831.789.015.544.080) 546.992.544.130 (30.787.000 330.856.088.177. 2009 Balance as at July 01.755 1.760 179.080 543.000 330.577.124.150.209 (45.847.000.208 (30.831.2009 Transaction with owners Final dividend for the year ended June 30.000.710) 5.200 65.114.108 179.108 2.794.645.519.000 3.515.117 1.390 1.080 1.532 4.519 - 7.459.831.593.687.ANNUAL REPORT 2010 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30.789.592) 3. 2008 200.2010 Other comprehensive income for the year .070.923 3.202.117 549.999 (45.000.454 5.555 3.459.369 (1.202. 2009 Total comprehensive income for the year ended June 30.065.831.609 Total comprehensive income for the year ended June 30.841.200 200.841.248.200 65.267. 2010 (30.923 539.544.710) 4.581.519.028.818 1.999 1.701.723 3.124.938 1.2010 Transaction with owners Final dividend for the year ended June 30.795.290) (1.089.251.000.000 The annexed notes form an integral part of these financial statements.476.202.400 156.544.177.000 200.330 1.715.000 330.021 539.000.108 1.114.715.124.592) 3.273.342.015. 2008 Balance as at June 30.000.935 1.000 65.972.847.856.400 156.710) 4.202.000 330.387.760 (1.245) 200.760 (5.498) 2. 2009 Profit for the year .957. 2010 Reserves Capital Share Capital Share premium Fixed assets replacement General reserves Unappropriated profit Revenue SUB TOTAL Other components of equity Unrealized gain / (loss) On forward On available for foreign currency sale investments contracts On derivative financial instruments SUB TOTAL TOTAL EQUITY Rupees Balance as at June 30.000.000.864.519.794.687.789. 2010 Profit for the year .209 543.245) (1.200 65.400 156.794.456. 2009 Balance as at June 30.544.855) (1.

the requirement of the Ordinance and of the said directives have been followed.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.I. The shares of the Company are listed on Karachi Stock Exchange.3 Sapphire Textile Mills Limited 18 . 1984. assumptions and use judgments that affect the application of policies and the reported amounts of assets. except for remeasurement of certain financial assets and financial liabilities at fair value through profit and loss and derivative hedging instruments at fair value. I. Provision for slow moving and obsolete stores and spares and stock-in trade.2.1 Basis of preparation These financial statements have been prepared under the historical cost convention. 2. 1984. including revised expectations of future events. fabric. 2. the provisions or directives of the Companies Ordinance. Estimates of liability in respect of employee retirement gratuity and compensated absences. Wherever. The registered office of the Company is situated at 212. Estimates. Approved financial reporting standards comprise of such international Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the provisions of the Ordinance. Functional and presentation currency These financial statements are presented in Pakistan Rupees which is also the company's functional currency. The areas involving a higher degree of judgment or complexity. Feroze Watwan. These financial statements have been prepared in accordance with the requirements of the Companies Ordinance. 1984). directives issued by the Securities and Exchange Commission of Pakistan (SECP) and approved financial reporting standards as applicable in Pakistan. 1913 (Now the Companies Ordinance.2. home textile products and energy sales. Cotton Exchange Building.3 2. Judgments and estimates made by management that may brave a significant risk of material adjustments to the financial statements in subsequent years are as follows: Residual values and useful lives of property. Revisions to accounting estimates are recognized prospectively commencing from the period of revision. Bhai Pheru and Bhopattain Lahore.4 Use Of Estimates And Judgments The preparation of financial statements in conformity with approved accounting standards requires management to make estimates. 2. Taxation. income and expenses. Chunian. In case requirements differ. 2. provisions of and directives issued under the Companies Ordinance. LEGAL STATUS AND NATURE OF BUSINESS Sapphire Textile Mills Limited (the Company) was incorporated in Pakistan on March 11. or areas where assumptions and estimates are significant to the financial statements are disclosed. Karachi and its mills are located at Kotri. 1984 shall prevail. 1969 as a public limited under the Companies Act.2. assumptions and judgments are continually evaluated and are based on historical experience and other factors. The preparation of financial statements in conformity with the above requirements requires the use of certain critical accounting estimates.1 BASIS OF PREPARATION Statement of compliance These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. 1984 (the Ordinance). Approved accounting standards comprise of such International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board as are notified under the Companies Ordinance. liabilities. 2.2 2. Chundrigar Road. It also requires management to exercise its judgment in the process of applying the Company's accounting policies. All financial information presented in Pakistan Rupees has been rounded to the nearest Rupee. plant and equipment. The Company is principally engaged in manufacturing and sale of yarn. the requirements of the Ordinance or directive issued by the SECP differ with the requirements of these standards. Nooriabad. 2010 1.2 2.

Amendments to IAS 32. Amendment to IFRS -2 Share base payment-Vesting conditions and cancellations (effective from January 01. contingent consideration to be measured at fair value. Revised IFRS 3 Business Combinations (effective from July 01. 2009) – Puttable Financial Instruments and Obligations arising on Liquidation requires puttable instruments. The IFRS makes limited improvements to accounting for insurance contracts until the board completes the second phase of its project on insurance Sapphire Textile Mills Limited 19 .Intangible assets the amendment is part of the IASB's annual improvements project published in April 2009 and the Company will apply IAS 38 (amendment) from the date IFRS 3 (revised) is adopted. amendments and interpretations became effective during the current year. Amendments require entities to assess whether they need to separate an embedded derivative from a hybrid (combined) financial instruments when financial assets are reclassified out of the fair value.5 2. introduces the concept of non-vesting conditions requires non-vesting conditions to be reflected in grant-date fair value and provides the accounting treatment for non-vesting conditions and cancellations. transaction costs other than share and debt issue costs to be expensed. Amendment to IAS 39. interpretations and amendments to published approved accounting standards Amendments to published standards effective in the current year: The following standards.1 Standards. IAS 27 ‘Consolidated and separate financial statements (effective from January 01. Revised IAS 1 – Presentation of financial statements (effective from January 01. with the related gain or loss recognized in profit or loss and any non-controlling (minority interest to be measured at either fair value or at its proportionate interest) in the identifiable assets and liabilities of an acquire. Amendment to IAS 38.Embedded derivatives (effective from January 01. Revised IAS 23 – Borrowing costs (effective from January 01. to be recognized as an equity transaction. to be classified as equity if certain conditions are met. When the group loses control of subsidiary. 2009) clarifies the application of existing principles that determine whether specific risks or portions of cash flows are eligible for designation in a hedging relationship. any pre-existing interest an acquire to be measured at fair value. 2010 Fair value of investment classified as ‘available for sale’. which represents changes in equity during a period other than those changes resulting from transactions with owners in their capacity as owners. 2009) clarifies the definition of vesting conditions. on a transaction by transaction basis. construction or production of a qualifying asset as part of the cost of that asset.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30. 2. 2009). 2009) Broadens among other things the definition of business resulting in more acquisitions being treated as business combinations. The amendment clarifies guidance in measuring the fair value of an intangible assets acquired in a business combination and it permits the grouping of intangible assets as a single asset if each asset has similar useful economic life. any interest retained in the former subsidiary will be measured at fair value with the gain or loss recognized in the profit or loss. IFRS 4 Insurance contracts (effective from January 01. and instruments that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation. 2009) requires accounting for changes in ownership interest by the group in a subsidiary. 2009). Amended IAS 27 – Consolidated and Separate Financial Statements (effective January 01.Financial instruments: Presentation and IAS 1 Presentation of Financial Statements (effective from January 01. while maintaining control. 2009) removes the option to expense borrowing costs and requires that an entity capitalize borrowing costs directly attributable to the acquisition.Eligible hedged items (effective from January 01.5. 2009) introduces the term total comprehensive income. Total comprehensive income may be presented in either a single statement of comprehensive income (effectively combining both the income statement and all non-owner changes in equity in a single statement). or in an income statement and a separate statement of comprehensive income.Financial Instruments : Recognition and measurement . 2009). Amendments to IAS 39 and IFRIC 9 . The amendment removes the definition of the cost method from IAS 27 and replaces it with a requirement to present dividends as income in the separate financial statements of the investor.

otherwise meeting the definition of equity instruments in IAS 32. the liability for the dividend is measured at fair value. the difference between the carrying amount and fair value is recognized in the income statement.6 2.Transfers of the assets from customer (to be applied prospectively to transfer of assets from customers received on or after 1st July 2009). IFRS 7. amendments and interpretations of approved accounting standards are only effective for accounting periods beginning from the dates specified below.1 New / revised accounting standards. 2. provided the offer is made pro-rata to all existing owners of the same class of the entity's own non-derivative equity instruments.Related Party Disclosures (effective for annual periods beginning on or after January 01. Amendment to IAS 32 . When the non cash assets is distributed. If there are subsequent changes in the fair value before the liability is discharged. IFRS 5 Measurement of non-current assets (of disposal groups) classified as held-for-sale.Agreement for the Construction of Real Estate (effective from October 01. amendments to published accounting standards and interpretations that are not yet effective The following standards. IFRIC 18. there is no impact on profit for the year. IFRIC 17-Distribution of non-cash assets to owner (effective from July 01. Amendment provides guidance on the accounting for share based payment transactions among group entities. such as apartments or houses. In particular. 2010).Share-based Payment . IFRIC 19 . 2010). options and warrants . IFRIC 15. 'off-plan'. 2009. Sapphire Textile Mills Limited 20 . particularly paragraph 15 (to achieve a fair presentation) and paragraph 125 (sources of estimation uncertainty) of IAS 1.effective January 01. the amendment requires disclosures of the fair value measurements by level of a fair value measurement hierarchy.Extinguishing Financial Liabilities with Equity Instruments (effective for annual periods beginning on or after July 01.Group Cash-settled Share-based Payment Transactions (effective for annual periods beginning on or after January 01. plant. that is . IFRS 8. and equipment that the entity must then use either to connect the customer to a network or to provide the customer with ongoing access to a supply of goods or services (such as a supply of electricity. the amendment provides clarification that IFRS 5 specifies the disclosures required in the respect of non-current assets (or disposals group) classified as held for sale or discontinued operations. IFRIC 19 clarifies the accounting when an entity extinguish the liability by issuing its own equity instruments to the creditor. 2010).6. before construction is complete. The standard also requires that an entity issuing insurance contracts (an insurer) to disclose information about those contracts. it also clarifies that the general requirement of IAS 1 still apply. 2009) replaces IAS 14 and requires an entity to determine and present operating segments based on the information that is provided internally to the Chief Operating Decision maker who is responsible for allocating recourses and assessing performance of the operating segment. The amendment is part of the IASB's annual improvements project published in April 2009. This interpretation clarifies the requirements of IFRSs for agreements in which an entity receives from a customer an item of property. These standards are either not relevant to the Company's operations or are not expected to have significant impact on the Company's financial statements other than increased disclosures in certain cases: Amendment to IFRS 2 .issued to acquire a fixed number of an entity's own non-derivative equity instruments for a fixed amount in any currency are classified as equity instruments.Financial Instruments Disclosures (amendment) . 2009) clarifies the recognition of revenue by real estate developers for sale of units. jointly controlled or significantly influenced by a government (referred to as government . this is recognize in equity. The amendment requires enhanced disclosures about fair value measurement and liquidity risk.Classification of Right Issues (effective for period beginning on or after February 01.11 . gas or water). 2009) states that when a company distributes non cash assets to its shareholders as dividend. 2011).Operating segment (effective from January 01. As the change in accounting policy only results in additional disclosures. The amendments to IAS 24 simplify the disclosure requirement for entities that are controlled.related entities) and clarify the definition of a related party.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30. Under the amendments to IAS 32 rights. Revised IAS 24 . 2010 contracts.

Sapphire Textile Mills Limited 21 . plant and equipment is charged from the month of addition while no depreciation is charged in the month of disposal. These policies have been consistently applied to all the years presented unless otherwise stated. Upon initial recognition. Transfers are made to relevant fixed assets category as and when assets are available for intended use. if any. The cost of replacing part of an item of property. 2011).1. plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property. and are recognized net within "other income" in profit or loss. Any change in estimates in future years might affect the carrying amounts of the respective items of property.The Limit on a Defined Benefit Assets. the leased asset is measured at an amount equal to the lower of its fair value and present value of minimum lease payments. The Company reviews the useful life and residual value of property. Minimum Funding Requirements and their Interaction (effective for annual periods beginning on or after January 01. Minimum Funding Requirements and their Interaction has been amended to remedy an unintended consequence of IFRIC 14 where entities are in some circumstances not permitted to recognize prepayments of minimum funding contributions. plant and equipment. 3. which are stated at cost less impairment losses. Depreciation on addition in property.The Limit on a Defined Benefit Assets. 3. 3. Finance cost under lease agreements are allocated to the periods during the lease term so as to produce a constant periodic rate of finance cost on the remaining balance of principal liability for each period. 3.1. if any. The costs of the day-to-day servicing of property. are classified as finance lease. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term.2 Capital work in progress Capital work in progress is stated at cost less any identified impairment loss and represents expenditure incurred on fixed assets in the course of construction and installation. Outstanding obligations under the lease less finance cost allocated to future periods are shown as a liability. The carrying amount of the replaced part is derecognized. Cost comprises acquisition and other directly attributable costs.1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Property. plant and equipment with a corresponding effect on depreciation charge. plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably.1 Owned assets Property. plant and equipment on a regular basis. The International Accounting Standards Board made certain amendments to existing standards as part of its second and third annual improvement project.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30. plant and equipment The significant accounting policies adopted in the preparation of theses financial statements are set out below. 2010 Amendments to IFRIC 14 IAS 19 . The effective dates for these amendments vary by standards. Subsequent to initial recognition.2 Leased assets Leases in terms of which the Company assumes substantially all the risks and rewards of ownership. the asset is accounted for in accordance with the accounting policy applicable to that asset. plant and equipment are recognized in profit and loss as incurred. Gains and losses on disposal of an item of property. Depreciation is provided on a reducing balance method and charged to profit and loss account to write off the depreciable amount of each asset over its estimated useful life at the rates specified in note 4. IFRIC 14 IAS 19 . as an asset. 3. plant and equipment are stated at cost less accumulated depreciation except freehold land and leasehold.

the recoverable amounts are estimated to determine the extent of impairment losses. 3. 3. Depreciation is charged to income applying the reducing balance method at the rates specified in the respective note and after taking into account residual value. reduces the carrying amount of investment.5. if material. the asset is written down to its recoverable amount. all other investments are classified as non-current. A reversal of impairment loss is recognized in the profit and loss account.1 Investment in subsidiary companies Investments in subsidiaries are initially recognized at cost. Share of post acquisition profit and loss of associates is accounted for in the Company's profit and loss account. Maintenance and normal repairs are charged to profit and loss account as and when incurred. thereafter the carrying amount is increased or decreased to recognize the Company's share of profit or loss of associates. Major renewals and improvements are capitalized.3 Intangible assets Costs associated with maintaining computer software programmes are recognized as an expense when incurred. At subsequent reporting dates.4 Investment property Investment property are stated at cost less accumulated depreciation and impairment loss. 2010 3. Management determines the appropriate classification of its investments at the time of the purchase and re-evaluates such designation on a regular basis. if any. are recognized as an intangible asset. Computer software cost treated as intangible assets are amortized from the date the software is put to use on a straight-line basis over a period of 5 years. Expenditure which enhances or extends the performance of computer software beyond its original specification and useful life recognized as a capital improvement and added to the original cost of the software. are recognized directly in the equity of the Company.5. 3.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30. The residual values and useful lives are reviewed and adjusted at each reporting date.2 Investment in associated companies . The Company's share of changes in the associate's equity which have not been recognized in the associates' profit and loss account. 3.5 Investments Investments intended to be held for less than twelve months from the reporting date or to be sold to raise operating capital. Depreciation is charged on addition during the year from the month in which the asset is acquired or capitalized and in respect of disposals during the year up to the month in which the asset is disposed off. Distribution received from invested. Sapphire Textile Mills Limited 22 . Direct costs include the purchase cost of software and related overhead cost.equity method Entities in which the Company has significant influence but not control and which are neither its subsidiaries nor joint ventures are associates and are accounted for by using the equity method of accounting. Where impairment losses subsequently reverses. Gain or loss on disposal is taken to the profit and loss account. Impairment losses are recognized as expense. The carrying value of investment property is reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. However. If any such indication exists and where the carrying value exceeds the estimated recoverable amount. are included in current assets. the carrying amounts of the investments are increased to the revised recoverable amounts but limited to the extent of initial cost of investments. costs that are directly attributable to identifiable software and have probable economic benefits exceeding the cost beyond one year. and carrying amounts of investments are adjusted accordingly. These investments are initially recognized at cost. if any.

are classified as investments at fair value through profit or loss and designated as such upon initial recognition. consequently hedge accounting is not used by the Company.5. The resultant gains and losses are included in the income. Derivatives are initially recorded at fair value on the date a derivative contract is entered into and are remeasured to fair value at subsequent reporting dates. Derivatives financial instruments entered into by the Company do not meet the hedging criteria as defined by IAS 39.3 Available-for-sale investments Other investments not covered in any of the above categories including investments in associates in which the Company has no significant influence are classified as being available-for-sale and are initially recognized at fair value plus attributable transaction costs. The Company follows trade date accounting for regular way of purchase and sales of securities. Unquoted securities are valued at cost.5 Held-to-maturity investment Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that an entity has the positive intention and ability to hold to maturity. 3. Net realizable value signifies the estimated selling price in the ordinary course of business less the estimated costs necessary to be incurred to make the sale.5. 3. Items in transit are valued at cost comprising invoice value plus other charges incurred thereon. Gains or losses on available -for-sale investments are recognized directly in equity until the investments are sold or disposed off. The fair value of such investments representing listed equity securities are determined on the basis of prevailing market prices. Provision is made for the amounts considered doubtful. No derivative is designated as hedging instrument by the company.8 Stores.at fair value through profit or loss Investments which are acquired principally for the purpose of selling in the near term or the investments that are part of a portfolio of financial instruments exhibiting short term profit taking. 3. which are accounted for at settlement date. These are stated at fair values with any resulting gains or losses recognized directly in the profit and loss account. spares and loose tools Stores and spares are valued at lower of weighted average cost and net realizable value.6 Derivative financial instruments Derivative instruments held by the Company generally comprise of cross currency interest rate swap and foreign currency forward contracts. or until the investments are determined to be impaired. at that time cumulative gain or loss previously reported in the equity is included in current year's profit and loss account.4 Held-for-trading investments . spares and loose tools is determined based on management estimate regarding their future usability. these are stated at amortized cost with any difference between cost and redemption value being recognized in the profit and loss account over the period of the investments on an effective yield method. Investments classified as held to maturity are recognized initially at fair value. Amounts considered irrecoverable are written off to profit and loss account. Sapphire Textile Mills Limited 23 .5. Subsequent to initial recognition. Derivatives with positive impact at balance sheet date are included in 'other receivable' and with negative impacts in 'trade and other payables' in the balance sheet.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30. except for sale and purchase of securities in future market. plus attributable transaction cost.7 Loans. 2010 3. 3. Fair value of listed securities are the quoted prices on stock exchange on the date it is valued. advances. Provision for obsolete and slow moving stores. 'Recognition and Measurement of Financial Instruments'. 3. Subsequent to initial recognition these are measured at fair value. deposits and other receivables These are stated at cost. less provision for impairment if any. with any resultant gain or loss being recognized directly in equity.

Work-in-progress is valued at average manufacturing cost. Amounts recognized in the statement of financial position represent the present value of the defined benefit obligation as adjusted for unrecognized actuarial gains and losses and unrecognized past service cost. Significant financial difficulties of the debtor. Post retirement Benefits Defined benefits plans The company operates an unfunded gratuity scheme for its permanent employees as per terms of employment who have completed minimum qualifying period of service as defined under the scheme.12. When a trade debt in uncollectible. in the case of management staff. and 8.10 Trade debts Trade debts are initially recognized at fair value and subsequently measured at cost less provision for doubtful debts.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.11 Bank borrowings Borrowings are initially recorded at the proceeds received. plant and equipment are classified as tangible fixed assets under 'plant and machinery' category and are depreciated over a time period not exceeding the useful life of the related assets. 3.1 Employees' retirement benefits Employee Benefits Compensated absences The company accounts for all accumulated compensated absences in the period in which absences accrue. The cost of providing benefits is determined using the projected unit credit method. Finished goods are valued at lower of average manufacturing cost and net realizable value. and default or delinquency in making payments are considered indicators that the trade debt is doubtful and the provision is recognized in the profit and loss account. 3. less estimated costs of completion and the estimated costs necessary to make the sale. Items in transit are valued at cost accumulated to the reporting date. In subsequent periods.12 3.33% of basic salary. plus direct expenses paid thereon. Actuarial gains and losses which exceed 10 percent of the greater of the present value of the company's obligation are amortized over the expected average remaining working lives of the eligible employees. A provision for doubtful debts is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the trade debts.33% of basic salary and cost of living allowance. Sapphire Textile Mills Limited 24 .12. with actuarial valuations being carried out at each balance sheet date. Goods-in-transit are stated at cost. The assets of the fund are held separately under the control of trustees. 2010 Spares parts of capital nature which can be used only in connection with an item of property. 3. The Company and the employees make equal monthly contributions to the fund at the rate of 8. borrowings are stated at amortized cost using the effective yield method. it is written off against the provision.2 Defined Contribution Plan There is an approved contributory provident fund for management staff for which contributions are charged to income for the year. For non-vested benefits past service cost is amortized on a straight line basis over the average period until the amended benefits become vested. 3. 3. Net realizable value is the estimated selling price in the ordinary course of business. probability that the debtor will enter bankruptcy of financial reorganization. Waste products are valued at net realizable value.9 Stock-in-trade Raw materials are valued at average cost. Past service cost is recognized immediately to the extent that the benefits are already vested. in case of non-management staff. Finance costs are accounted for on an accrual basis and are included in current liabilities to the extent of the amount remaining unpaid.

13 Trade and other payables Liabilities for trade and other amounts payable are measured at cost which is the fair value of the consideration to be paid in future for goods and services received. 3. it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and reliable estimate of the amount can be made. Dividend income and entitlement of bonus shares are recognized when right to receive such dividend and bonus shares is established. 3. However.16 Provisions Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events. if any. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. government agencies and similar bodies. the effects on deferred taxation of the portion of income subject to final tax regime is also considered in accordance with the requirement of Technical Release . 3.17. based on tax rates that have been enacted or substantively enacted at the each reporting date. construction or production of a qualifying asset.20 Foreign currency transactions and translation Foreign currency transactions are translated into Pak Rupees using the exchange rates prevailing at the dates of the transactions. 3. In this regards.2 3. Deferred tax assets and liabilities are measured at the tax rate that are expected to apply to the period when the asset is realized or the liability is settled. Government grant These represent transfer of resources from government. taxation is based on applicable tax rates under such regime. Return on bank balances is accrued on a time proportion basis by reference to the principal outstanding and the applicable rate of return. Deferred tax Deferred tax is provided using the balance sheet liability method in for all temporary differences at the balance sheet date between tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. rebates and exemption available. Foreign exchange gains and losses on translation are recognized in the profit and loss account. 2010 3.18 Revenue recognition Revenue from sale of goods is recognized when goods are dispatched to customers and invoices raised.27 of Institute of Chartered Accountants of Pakistan.19 Borrowing cost Borrowing costs are recognized as an expense in the period in which these are incurred except to the extent of borrowing costs that are directly attributable to the acquisition. in return for the past or future compliances with certain conditions relating to the operating activities of the entity. Such borrowing costs are capitalized as part of the cost of that asset up to the date of its’ commencing. All monetary assets and liabilities in foreign currencies are translated into Pak Rupees at the rates of exchange prevailing at the balance sheet date. if any.15 Dividend Dividend distribution by the company's shareholders is recognized as liability in the period in which the dividends are approved.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30. Deferred tax asset is recognized for all deductible temporary differences and carry forward of unused tax losses.17 3. for income covered under final tax regime.1 3. to the extent that it is probable that taxable profit will be available against which such temporary differences and tax losses can be utilized.14 Taxation Current year The charge for current taxation is based on taxable income at the current rate of taxation after taking into account applicable tax credit.17.3 3. The grants are disclosed as a deduction from the related expense.17. 3. All non-monetary items are translated into Sapphire Textile Mills Limited 25 . 3.

including revenues and expenses that relates to transactions with any of the Company's other component.1 Property. plant and equipment The following a is statement of property.111. plant and equipment.831. Segment capital expenditure is the total cost incurred during the period to acquire property. the asset’s recoverable amount is estimated in order to determine the extent of the impairment loss.141.24 Offsetting of financial assets and liabilities Financial assets and liabilities are offset and the net amount is reported in the financial statements only when there is a legally enforceable right to setoff the recognized amount and the company intends either to settle on a net basis or to realize the assets and to settle the liabilities simultaneously.22 Impairment The carrying amount of the company’s assets are reviewed at each reporting date to determine whether there is any indication of impairment. amortized cost or cost. Home textile products and Power generation. if any.4 3. as the case may be. 3. All financial assets and liabilities are initially measured at cost. Nature of the related party relationship as well as information about the transactions and outstanding balances are disclosed in the relevant notes to the financial statements. plant and equipment: Operating property. Segment results that are reported to the CEO includes items directly attributable to a segment as well as those that can be allocated on a reasonable basis. income tax assets.25 Related party transactions All transactions with related parties are carried out by the Company at arms' length price using the method prescribed under the Companies Ordinance 1984.3 4. 3. For the purposes of cash flow statement cash and cash equivalents consist of cash and cash equivalents as defined above.21 Cash and cash equivalents Cash and cash equivalents comprise of cash at banks. Weaving. plant and equipment Capital work-in-progress Note 4. An operating segment is a component of the Company that engages is a business activities from which it may earn revenues and incur expenses.946. 3. Unallocated items comprises mainly corporate assets.814 Sapphire Textile Mills Limited 26 .481. cancelled or expires. which also reflects the management structure of Company.679. 3. Any gain or loss on derecognizing of financial assets and financial liabilities is included in the profit and loss account for the year.969. 2010 Rupees 2009 Rupees 4 4.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.2 & 4. If such indications exist. The business segments are engaged in providing products and services which are subject to risks and rewards which differ from the risk and reward of other segment.094 3. net of temporary overdrawn bank balances.650. Impairment loss is recognized as expense in the profit and loss account. liabilities and related income and expenditure. These financial assets and liabilities are subsequently measured at fair value. Segment reported are Spinning.777. An operating segment's operating results are reviewed by the CEO to make decision about resources to be allocated to the segment and assess its performance and for which discrete financial information is available.26 Segment reporting Segment reporting is based on the operating (business) segment of the Company. 2010 rupees at exchange rates prevailing on the date of transaction or on the date when fair values are determined.158 3.935 194.23 Financial instruments Financial assets and financial liabilities are recognized when the company becomes a party to the contractual provisions of the instrument and de-recognized when the company loses control of the contractual rights that comprise the financial assets and when the obligation specified in the contract is discharged.043 3. 3. cash in hand and short term deposits. 3.874. which is the fair value of the consideration given and received respectively.771 168.

267) (17.130.508 - 76.605 32.862.011 12.952 (6.365.025.204.035.147) 458.039 28.776.692 68.548 4.692 68.862.931) 61.771 Deprecation charged for the year - - (48.484 (1.771 Cost Accumulated depreciation Net book value 116.797.616) 15.112.726.378.026) (18.777.200.087 (142.805 93.308 (13.239 872.969.491 (1.676.814.738 7.499 (2.451 12.230.499 (2.297.328.192.399 12.365.065.917 10% 91.290.631 143.114.651 (60.954) 70.479 58.087 21.216.028.492.446 (3.351.075.hold Labour.757 155.495.589) (4.107.189.950.370.855.586.662.711.393.962 26.158.357.981) (269.853 4.955.221 (9.182) 3.872.087 (142.651 (60.178 877.312) 114.047) 6.117.318 113.901) 102.756.650.813) (295.400.133 405.297.703 288.098 2010 At June 30.333) 133.450.112.326) (1.726.796) (2.026) (18.479 63.482 78.853 4.329) (1.646.901) 102.967.689 114.342.576) 12.027.955.451 742.044 2.216.377.649) (8.559) 17.473.057) 1.956 1.677 (30.502.602.987.087 (131.607.580) 447.040 21.806.689 12.461 245.498.427.153 5.209 27 Depreciation rate % per annum - - 10% .132.713 26.077.hold Labour.659.000 10.2010 106.313.382.671 (17.664 (5.032.584.645.783.003 - 95.586.662 4.183 7.382.671.087 21.356 (331.878.987.709 221.592.358 (2.949) 1.965.000 277.371.044 5.875) 21.266.343.199.719 Disposals: Cost Depreciation (7.283 1.266.517) (32.770.403.639.030 365.527 (2.014.393.777.217 70.836.370) 1.244.323 35.481.694) (9. plant and equipment: Cost Accumulated depreciation Net book value 114.055.505) 9.118 (1.112 24.356 (331.956 10% 1.692 68.112.690 245.722.2009 116.hold Expired lease Land ANNUAL Free .051.517 30.106 15.146.430) (150.679.988.916.218.128.291 27.671 (17.403.401.635) 19.869 9.853) 1.709 82.071.267.925.hold Factory building At July 01.434 (36.371.037.117.146.151) 56.062.804.098 Depreciation rate % per annum - - 10% Land Factory building For the year ended June 30.343.058.965 (356.571.216.948.711. 2010 Cost Accumulated depreciation Net book value .107.767 42.804.721) 61.690 5% 10% 5% 245.917 - - (5.000) 14.722.378.716.484 10% 30% 34.671 (19.189) Closing net book value .030.078 5% 2009 Expired lease Plant & machinery Rupees Electric installations Fire fighting equipment Electric equipments Computers Office equipments Mills equipments Furniture & fixtures Vehicles Plant & machinery Total 10% 5% 20% 10% 10% 10% 10% 30% 10% 245.495.381) (1.4.123 447.811 1.186 32.673 5.339) (58.794 (53.841.689 12.131.602.620.878.437.620.127.673 20% 5.300 (8.999.917 91.797.354.494.114.962 26.689 12.760) 33.089.246.078 92.495.649) (8.200 4.960.156 (3.365.862.296.925.188) (31.192.231 4.139 (396.199 63.948 47.651. staff Leased building colony and improvements others Plant & machinery Electric installations Fire fighting equipment Electric equipments Office equipments Mills equipments Furniture & fixtures On lease .650.003.562.803 (20.948.209 At June 30.953 191.104) 36.217.706 365.352 179.602. 2009 209.377.928 (379.675) 11.878.983) (302.055. staff colony and others Factory building Rupees Computers Plant & machinery Total Vehicles Labour.652.446 (3.624 - 251.679.849 12.711.2009 116.438 - 12.177) (6.529.438 12.531 (3.804) 153.984) 6.323 15.776.864.428 (3. staff Leased building colony and improvements others At July 01.hold Lease .087 101.565 (206.283 1.678 (378.775 27.619.638.638.315 60.958) 459.601 6.123 825.987.673.689 106.371.603.600 40.775.264) 16.869 9.882 (68.217 70.014.776.399 458.498.979.060 2.636.413 6.217.346 (7.438 12.370.484 34.961) 148.399 789.197 (443.335.635) (2.936.289.709 736.690 102.627) 3.726.673 (11.424.682) 3.603.619.054.030 365.212) 764.882 (38.544.199 63.399 12.045) 7.201 32.864.186 32.107.582) 2.676.419.928 (288.106 32.531 (3.089.686 2.586.551.926.677.961) 148.270.706.904) 15.073) (7.003) (52.849 12.968 (24.854.230) 2.163 The following is a statement of operating property.675) 3.684) 92.872.582) 2.640) 82.444.620.354.633.652.346 (10.221 63.143.429.404.790 (153.797.502.322 - 303.838.308 (13.546.549.582 - 10.373.130.047) 6.711.hold Lease .2 2010 On free .841.494.076) 48.491.407 10% 10% 10% 20% 10% 7.189.352) (19.709.365.027.365 (113.295.374.440.650.493.813.571.689 116.435.957 (43.046 5.790) 38.767 10% 10% 20% 10% 7.492.230.914.671 (16.032.660 (17.862.776.935 Sapphire Textile Mills Limited (1.635) 19.200.277.843) 153.517 30.117.636.336) (14.000 - 24.000 (5.726.100. 2008 187.252.341) (6.673.954) 10.457.813) (295.298.339) (58.823) 2.016) (4.508 10% 10.529.278 29.783) (3.759) 16.214.139 (47.295.689 12.373.377.775.378.427) 3.583) (17.528.182 365.544.673.805 56.112 30.346 11.854 2.777.209 REPORT During the year Additions 12.260.956 42.016) (4.900.969.433) Closing net book value .674 14.851 (14.207.962 26.058.628) 148.057) 1.498.666 29.411.987.296.872.031 127.224) (287.771) 12.620.407 61.666 29.517) (32.491 12.657.217 (8.724 35.378.528.605.679.689 12.671.146.675) 3.066.606. 2010 Free .411.710.343.677 (30.123 12.429 Disposals: Cost Depreciation (7.950.491 12.306) 2.161) (2.684 1.689 12.473.342.655.359 NOTES TO THE FINANCIAL STATEMENTS During the year Additions 22.721) 61.177.204.557.565 (206.673.264) 16.992.296) (1.465.081.603.361 6.362 (3.031 127.813.479 58.935 Deprecation charged for the year - - (46.399 789.186 19.382.689 116.857 5.787.310) 16.771 Cost Accumulated depreciation Net book value .131.874.hold Factory building On free .470.853 4.266.922) (60.290.507.659.864.495.189.474.553) 2.144.915 14.993) 3.2010 106.546.479 58.147) 458.967. staff colony and others On lease .152.776.375.400 20.756.407 7.095.294) (1. 2009 209.508 10.898.813) (33.317 (282.896 (97.069.638.634.502.hold Labour.236.889.320.673.686.738 7.095.572.864.446.898.341) 24.967.

370 279.184 786.783 208.658 366.000 560.683 224.690 277.056.810 552. Ltd.867 260.296.943 2.000 Plant and Machinery Auto Cone Murata Sketcher Trutchler Card C-40 Marzoli Bale Breaker Trutchlar Vehicles BMW Cuore Cuore Honda Citi Honda Citi Honda Citi Honda Citi Honda Civic Honda Civic Honda Civic Honda Civic Honda Civic Honda Civic Suzuki Baleno Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Khyber Suzuki Mehran Suzuki Mehran Toyota Corolla Toyota Corolla Toyota Corolla Toyota Corolla 4.947 298.000 24.804. Nazkat Ali. Salman Masood.000 10.046 236.043 4.075 42.880 1.065. Hassan Amir Mirza. Karachi M/s.200 28. Muhammad Ilyas.317 175.141.597 326.831.808 509.199.500 1. Karachi Mr.000 300.000 10.928 3.925 107.386 212.479 396.000 250.692 633.000 1.053 201.200 475.056 6.296.270. Karachi 1.000 830.418 Mr. AL-Ahmed Textile Mill Pvt Ltd.955 3.773.000 500.755 565.665.662 374.954 13.052 9.000 302.505 20.618 307.500 830. Irshad Hussain. 2010 2010 Rupees 2009 Rupees Note 4.000 595.353 555.039.000 12.403 423.000 380.000 700.417 1.011 168.000 560.100. Faisalabad M/s.493.505 542.570 2.000 1. Naeem Haider.986 3.695 61.000 500.000 250.864. Karachi 10.000 810. Mustafa Nawaz.133 138. Dera Ismail Khan Mr. Hyderabad M/s. Zia ul Qadir.000 300.625 3.293 379. Muhammad Umar.000 1.875 3. Karachi Mr. Khadija.784 611.117.353 624.002.856.128 471. Lahore Mr.783 328. Faisalabad Mr.854 7.683 4.000 1.000 400.342 228.067 194.662 64.000 750.480 150.718 769.000 14.750.000 604.027. Usman Saeed Khan.450.000 843.189.5 Particulars of operating property. Lahore Mr. Karachi Mr. Robert Cotton Ass.097 578. Famous Textile Mills Limited.310 47.872 132. Sahiwal 1.658 261.937 786. Lahore Mr.025.158 156.305 88.973 321.000 370.755 680. Lahore Mr.000 400.053 890. plant and equipment disposed off during the year are as follows (through negotiation): Cost Accumulated Depreciation Net Book Value Rupees Land Free Hold Land 10. Kotri Mr.353 180.948 14. Lahore Mr.500 830.. Lahore Miss. Karachi Mr.000 600. Lahore Mr.245 467.620.816 (3. Karachi Mr.027 1.803 1.000 150.147 274. Lahore M/s.311 320. Multan Mr. Lahore Mr.608. Qureshi.192 224. Ltd.3 The depreciation charge for the year has been allocated as follows: Cost of sales Administrative expenses Income from power generation 27 29 32.606.627 387.760.296. Peshawar Mr.382 795.. Karachi Miss.084 110.520 409.000 739. Sapphire Finishing Mills Ltd.000 275.804. Zulfiqar Hussain Zulfi. Hyderabad Mr.000 88.338 185. Naeem Hayder.296.520 99.212.776 28.665. Muhammad Khalid.107.317 624.160 1.272 Mr.344.645.595.112. Muhammad Tariq Mehmood.949.777 378.816 67. Muhammad Zahid Afzal.066.889.083.382 192.305 240.000 490.928 2.132..000 480.000 399..948 4.282 40.000 399.647 219.000 245.223 321.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30. Muhammad Arif.148.224 121. Abid Husain.000 250.000 Sale Proceeds Profit / (loss) Particulars of Buyers Sapphire Textile Mills Limited 28 .000 1.217 271. Ltd.349 3.000 300. Abdul Aziz.316 296.800.784 147.916 289.000 287.952 1.000 150.428 2.853 125. Ghulam M.513 12.103.000 500. Faisalabad Mr.128 117.683 9. Tuba Take Singh M/s.500 1.033. Nabeel Riaz.456.877. Lahore Mr.000 250.000 325.000 200.252.000 400.000 150.181.093.576.635 259.500 1.268. Adamjee Insurance Co.867 161.184 303.417) 800.375 496. Saima Raza.000 12.906 8.224 351.472 7.000 400.582 525.446. Lahore Mr.590.684 3.2 368.192.166.000 734.216 127. Syed Nadeem Hadier Bukhari.000 1.142.346 21. Adamjee Insurance Co.918 434.4 The following is a statement of capital work-in-progress: Civil works and Buildings Plant and machinery Electric installations Mill equipment 179.000 111.200 294.218 4.084 541. Haroon Mukhtar.000 2.100.000 849. Ajmal Atiqus Siddiqui.851 Total 42.525 2.000 M/s.

754.949.577.140.165 1. 2008 Opening net book value (NBV) Additions Depreciation charged Balance as at June 30.100.998) 17.710.317 6.140.847 (6.379 20% 7.379 250.949.3 The depreciation charge for the year has been allocated as follows: Other operating expenses 31 2.549.000 (1.710.1 Cost of leasehold land and building on leasehold land represent 50% cost of land and building purchased jointly with an associated company.160.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.984 7.794.989) 7.660.160.163) 149.982 10% 10% 140.949.000 6.781.967. 2010 Cost Accumulated depreciation Net book value .317 121.213 (1.969) 5.317 19. Note 2010 Rupees 2009 Rupees 5.167) 6. 2010 5 Investment property Land Leasehold Net carrying value as at July 01. 2009 (NBV) Depreciation rate % per annum 121.999.134 Freehold Building on Leasehold land Freehold land Total 5.400.734.317 121.000 (414.998) 15.167) 6.980 (1.100.299 121.160. 2010 (NBV) Gross carrying value as at June 30.405.047.206.299 13.920.468) 7.297 (1. 2009 Transfer from capital work-in-progress Amortization Net book value at June 30. 2010 Cost Accumulated amortization Net book value .920.160.204.833 154.410 20% 11.140.000 (2.405.410 1.685. The property is registered in joint names.317 6. In the opinion of the Directors the market value as on June 30.035.240.000 6.781.437) 5.140.297 (4.312. Agreement for joint venture made.379 Sapphire Textile Mills Limited 29 . 2009 Net book value as July 01.984 7.000 19.2 5.169.996) 15.134 121. 2010 is not materially different. 2010 Gross carrying value at June 30.982 (1.160.405.2010 Amortization rate % per annum 11.169.833 138.998) 138.000 17.619.847 (4.980 (4.794.499.317 121.000 (414.160.998 6 Intangible assets Computer software Net carrying value as at July 01.155 7. 2009 Opening net book value (NBV) Additions Depreciation charged Balance as at June 30.165) 149.717.685.2010 Net carrying value as at July 01.549.

820.687.387.370.000 Cost 2009 Rupees 1. 0.000 33.Private .ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.000 100.470.18) per share.4 7.548.870.286 42.000 22.961 2.000 Sapphire Textile Mills Limited 30 .600.99 (June 30. 2009 Rs.918.804 1.936 1.286 2010 Rupees 9.286 22. 2009 Rs.206.private Number of Shares Name of Company 2010 900.000 Cost 2009 Rupees 16. 2010 2010 Rupees 2009 Rupees Note 6.663.Listed . 6.Foreign 7. 7.310. nil) per share.940.570.807.933.321 854. 32. 42.Available for sale In other company 7.000 19.8 (June 30.570.336.969 1.687.000 7.321 29.174 In associates .500.2 Computer software are being amortized over a useful life of 5 years.369.940. 8.400 467. 3.000. Amortization charge for the year has been allocated as follows: Other operating expenses 31 1.27 (June 30. 2009 Rs.000 Sapphire Renewable Solutions (Pvt) Limited Equity Interest Held 100% Break up value on the basis of audited accounts for the year ended June 30.356.548.774 434.760.000 15.000 2009 1.679) 239.5 7.14) per share.989 7 Long term investments Related parties .1 7.Unlisted In other companies .at cost: In subsidiary .000.734.2 Investments in subsidiary company .880 464.000 32.356.000 Sapphire Holding Limited Equity Interest Held 100% Break up value on the basis of audited accounts for the year ended June 30.774 437.408.264 All investments have a face value of Rs.000 2009 100.000 2.000 19.unlisted Number of Shares Name of Company 2010 1.889.3 32. 2010 Rs.000 Sapphire Wind Power Company Limited Equity Interest Held 100% Break up value on the basis of audited accounts for the year ended June 30.321 21. Deposit for share application money 10.940. Deposit for share application money Impairment loss on equity investments (8.613. 2010 Rs.6 1.370. 10 per share unless stated otherwise.286 29.Unlisted .2 7.1 6. 2010 Rs.1 Investments in subsidiary company .000 2010 Rupees 16.654 19.870.370.000 239.

000 60.000 Diamond Fabrics Limited Equity Interest Held 38. 2009: 9.942. 29.04% (2009: 3.54 audited) per share.000 2010 Rupees 854.699.548. 2010 Rs. 59.440.325 million).380.28%) Break up value on the basis of un-audited accounts for the year ended June 30. 2009: Rs.960 shares of Danish Krone (DKK) 1000 per share Impairment loss on equity investments Equity Interest Held 49% (2009: 49%) Break up value on the basis of audited accounts for the year ended April 30.000 294.295 Reliance Cotton Spinning Mills Limited Equity Interest Held 3.468.3 Investments in subsidiary company .86) per share.000. 2009 Rs. 1.000 294.243 2009 2.67% (2009: 2. 2010 7.000 Fair value / Cost 2010 Rupees 48.206 million (2009: 6.5 (2009: DKK 541.07 audited) per share.748. 2010 DKK 439. 2009: Rs.03%) Break up value on the basis of un-audited accounts for the year ended 30 June.960 980 Beirholms Sapphire A/S Denmark 1.923 7. 12.4 Investments in associates .000.000 Cost 2009 Rupees - 7.820.000 2009 Rupees 48.461.120) 12. 2010 amounted to Rs. 105. 434.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.400 27.059. 2010 Rs. 313.500 29.99 (June 30. 854.listed Number of Shares Name of Company 2010 2.33%) Break up value on the basis of un-audited accounts for the year ended 30 June.315. 2009: Rs.000 Sapphire Electric Company Limited Equity Interest Held 1.03 % (2009: 32. 301.072.5) equivalent to Rs.550.153 (2009: Rs.unlisted Number of Shares Name of Company 2010 5.400 60.311 Sapphire Fibres Limited Equity Interest Held 14.000.072.000 Sapphire Power Generation Limited Equity Interest Held 16.851 8.53) per share.54 % (2009: 16.315.699.000 Sapphire Textile Mills Limited 31 .468.000 1.774 29.000 15.770. (June 30.295 313. 9.400 (15. 6. 15.94%) Fair value of the ordinary shares as at June 30. . 29.000 19. 2010 Rs.615.USA Equity Interest Held 100% Break up value on the basis of audited accounts for the year ended June 30.923 Cost 2009 Rupees 21. 6.685.774 8.28% (2009: 38. 1.851 2010 Rupees 21.35 audited) per share.000 19.000 2009 5.880 15. 2010 Rs.79 (June 30. 62. nil) per share.550.880 437.5 Investments in associates .315 million (2009: 301.206 million).086.foreign Number of Shares Name of Company 2010 200 2009 Sapphire Home Inc.04%) Fair value of the ordinary shares as at June 30. 7.086. 6. 138.748.54%) Break up value on the basis of un-audited accounts for the year ended 30 June.685. 2010 Rs.548.807. 2010 amounted to Rs.95% (2009: 14.461.000 6.08 (June 30.000.96 (June 30.500 Sapphire Finishing Mills Limited Equity Interest Held 32.

797 21.648 20. this investment has been classified under non .188.320. 36.379 4.532.000) deposit with Yousuf Agencies (Private) Limited an associated company.935.055.933.609.135 585.965.628.873.320.096 277.692 14.096 466.2 All the loans are granted to the employees.7 During the year.184 (2009: Rs.unsecured (considered good) Executives Other employees 21.current assets as the Management does not intends to dispose of this investment within 12 months from the reporting date.693 8. free of interest in accordance with their terms of employment.985 7.376 38.1 8.095 1.935.344 1.3 Movement in loans to executives Balance at the beginning of the Year Amount disbursed during the Year 18.1 Include is an amount of Rs.336.592 5.PTCL .ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.567 6.330.785. Note 2010 Rupees 2009 Rupees 8 Long term loans and advances Loan to employees .148. Maximum amount due from executives during the year.322.055.148.889.188 9.184 21.320.797 18.130.770.579.935.Available for sale Number of Shares Name of Company 2010 2009 Quoted MCB Bank Limited (Note: 7.792 27.364 2.236 1. 8. Sapphire Textile Mills Limited 32 .422.109.567 9 Long term deposits Security deposits .184 16.WAPDA .000 277.348.433 1.804 7.Others 7. 21.320. 18.330.803.715.095 1.044 8.072.285.768 18. calculated by reference to month-end balances.036.6 In other companies .449 730.7) Add: Adjustment arising from measurement to fair value Fair value / Cost 2010 Rupees 2009 Rupees 9. was Rs.981 Amount recovered during the Year Balance at the end of the Year 2.057.842.560 Current portion of loans shown under current assets 10.961 86.125 34. 2010 7.036.236 1.381 1.450.364 21.985 Unquoted Novelty Enterprises (Pvt) Limited 86.567).000 (2009: Rs.715. 36.783 9.567 16.808.568 7.414 24.081.SNGPL .270.725 737.650.408.1 9.676.

079.946 133.865 83.731 718.733 9. spares and loose tools Stock . 2010 2010 Rupees 2009 Rupees Note 10 Inventories Stores.1 10.2 Stock .675.267.651.against export Provision for doubtful debts Unsecured .426.608 1.916.592.729.310.923.520.063 784.500.321 11 Trade debts Secured .716 1.621.394.409) 603.492 543.considered good Domestic debts For waste Energy Others 11.375.818.trade 10. spares and loose tools Stores Spares .365 114.593.008 2.860 11.722 108.153 (3.in hand Raw material .702. 41.684 20.247.considered good Foreign debts .230 189.522 10.759.856. nil) receivable against indirect export sales.218.663.3 684.356 101.255 570.in transit 94.315.267.199.141 225.659.878.467.583.071 2.883 2.622 760.469 16. Sapphire Textile Mills Limited 33 .456) 648.476 833.511.in hand Spares .106.778.1 Stores.759.904 21.in .859.611 Work in process Finished goods Waste 196.008 1.394.314 806.794 907.628 27.837.026 Provision for doubtful debts 11.681 833.663.759.4 652.257 13.638.in transit 1.321 2.003 48.638.098 129.155.326 760.890.594.400 (2009: Rs.681 1.686.201 2.155.201 Loose tools 10.865 2.898.2 225.220.003 921.4 (115.817.002 744.562.984.697 273.273.148.515.817 12.613.690.873 199.179 11.199.008 24.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.trade Raw material .1 Domestic debts include amount of Rs.1 to 11.617 1.596.393.179 273.275.in .592.223 199.254.251.

610 27.unsecured .000) prepaid rent with Yousuf Agencies (Private) Limited an associated company.224.988 10.206 1.354.996 11.4 12 Loans and advances Considered good Current portion of long term loans .863 1.652 14.935.189 148.290 13.000 6.926.531 7.818 8.305.846 1.675.209 4. Provision for doubtful debts Balance at the beginning of the year Provision made during the year Amounts written off (against provision) 119.322.868 5.584.078.585 46.667.648 17.123 2.to contractors .413 12.373.380 1.677.035 750.422. 14 Other receivables Dividend receivable Claims receivable from an insurance company Receivable from related parties against shared expenses Export rebate receivable Unrealized gain on remeasurement of forward foreign currency contracts Unrealized gain on remeasurement of interest rate swap at fair value Receivable against sale of shares Receivable against subsidy on mark-up of long term loan Others 10.804 7.2 Sapphire Textile Mills Limited 34 .due from executives . 87.1 810.108 1.048.842.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.to others 3.276 23.865 119.508 26.3 The maximum aggregate amount of receivable due from related parties at the end of any month during the year was Rs.011.792 11. 120.328 (2009: Rs. 2010 2010 Rupees 2009 Rupees Note 11.957.due from other employees Advances .769.311 19.515.210.000 19.398.100 690.821 15.647.to suppliers .152.543.445 11.209.754.544.626 6.317.343.100 4.217 13 Trade deposits and short term prepayments Security deposits Prepayments 13. 70.826 9.304.675.891 1. 2.223.209 8.569 33.978.148.393 14.007.1 Included is an amount of Rs.057 2.068 3.909 1.1 14.081 5.158 million).865 - 11.707.966 million (2009: Rs.080 33.304.028 14.702.174.519.084.2 Domestic debts include the following amounts due from related parties: Amer Cotton Mills (Private) Limited Diamond Fabrics Limited Sapphire Fibres Limited Sapphire Finishing Mills Limited 4.

0 million).457.848 2.151 412.920 27.582. Limited Pakistan Strategic Company Limited Crescent Steel & Allied Prd.418.515 83.421.497 85.393 14.848.144.480 5.155.900 3.136.239 15.274.332 38.800 490.604 3.600 1.434 158.350.519 million) which had been taken to equity as unrealized gain.979.621.000 40. the company has entered into with Royal Bank of Scotland (Formerly ABN Amro Bank N.370 108.632 124.1 Held-for-trading Number of shares/units 2010 2009 346.000 591.652.115.084.732.690 55.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.943.301 2009 Rupees 130.306.799.051 5.138 Fair value 2010 118.500 21.144. Limited Lucky Cement Limited Pakistan Tobacco Company Limited United Bank Limited Arif Habib Investment Limited Cost 118.416. Pakistan) at the notional amount of Rs.317.740.521.712.632 15.770 24.237.382.938.2 This represents the fair value of one separate Cross Currency Interest Rate Swap agreement.588 244.915 1.821 856.682.247 799.173 Name of Investee Company ABAMCO Composite Fund NIB Bank Limited Cost Fair value 2010 2009 1.584. the company is entitled to receive 6 months KIBOR on notional amount and is required to pay 6 months LIBOR plus spread 0.916.000 457.600 10.000 14.426 6.500 35. 1.003.000 3.882 140.595 138.051.572 15.922 2.194.652.596.200 4.040 790.580 474.855 Sapphire Textile Mills Limited 35 .2 Available-for-sale Number of shares/units 2010 3.63% on USD notional amount.005.239 2009 2.2 490.027. nil (2009: Rs.669 124.516.940 31.680 4.000 1.389 5.1 15.742 2.1 Other receivables include the following amounts due from related parties: Neelum Textile Mills Limited Reliance Cotton Spinning Mills Limited Sapphire Fibres Limited 162.144.651 3.723 8.350.000 70.898 Name of Investee Company Hub Power Company Limited Gulshan Spinning Mills Limited Engro Chemical Pakistan Limited Fauji Fertilizer Company Limited Pakistan Petroleum Limited Pakistan Oilfields Limited National Bank of Pakistan Pakistan State Oils Limited Oil & Gas Development Co.064.000 2009 110.000 736. Under the terms of swap agreement. 2010 14.033 5.934 75.297.826 80.580 199.320 2.520 1. 770 million (equivalent USD 10.239 490.000 84.000 44.448.929.441. This transaction has been remeasrued at fair value at the end of the year and resulted in gain of Rs.972.882 Note 16 Income tax and sales tax Income tax Sales tax receivable Federal excise duty receivable 2010 Rupees 154.490 7.V. at each reset date.625 385.514 15.858 32.076.420 60. 2010 Rupees 2009 Rupees Note 15 Other financial assets Held-for-trading Available-for-sale 15.000 319.667.690.060 14.000 20.728.331 7.336.628.839.827 17.550 1.738 990.986 810.531. In addition to this the company is required to pay exchange difference arising due to fluctuation in USD/PKR rates between reset and the settlement dates.000 1.000 19.447.

542 133.348.764.240.764.642 71.67 3.691 120.876.988. 10 each issued as bonus shares 62.285 3.400 200.2 The following shares were held by the related parties of the Company as at 30 June 2010: 2010 Shares held Percentage Amer Cotton Mills (Private) Limited Crystal Enterprises (Private) Limited Diamond Fabrics Limited Galaxy Agencies (Private) Limited Nadeem Enterprises (Private) Limited Neelum Textile Mills Limited Reliance Cotton Spinning Mills Limited Reliance Textiles Limited Sapphire Agencies (Private) Limited Sapphire Power Generation Limited Yousuf Agencies (Private) Limited 675.083.50 0.1 17.400 2009 Rupees 62.2 17.594 100.400 The Company has only one class of shares which carry no right to fixed income.412. subscribed and paid-up capital 18 2010 2009 2010 Rupees Ordinary shares of Rs.083 133. Cash at bank on EURO account of EURO 12.785 704.2 17.51 2.3 17.350.350.941 3.36 0.067.21 0.242 272.Euro .963.235 75.242 272. 2010 2010 Rupees 2009 Rupees 17 Cash and bank balances With banks on: .currents accounts .19 9.035 371.206.785 604.138.67 3.083 72.36 Sapphire Textile Mills Limited 36 .258 211.206.740 13.874.023. Issued.876.594 43.36 2009 Shares held 675.92 1. 18.543.995 1.643 3.140 18.611 586.36 0.482.3 99.36 0.000 20.223 5.955 (2009: US$ 18.831.926 17.643 Percentage 3.1 17.611 586.488 Cash in hand 2.340 80.03 10.524 3.400 138.340 117.539 283.000 138.642 (2009: EURO 1.336.764 183.USD .65 1.3 Cash at bank on USD account of US$ 21.400 Number of shares 6.margin account Note 17.currents accounts .41 0.216.05 0.667 1.978 13.01 2.100 71.156 38.283 ).ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.140 200.367 2.deposit accounts . Cash at bank on deposits account and cash at bank on margin account under lien of a banks / financial institutions against guarantee issued on behalf of the Company.108 1. 10 each alloted for consideration paid in cash Ordinary shares of Rs.78 1.36 0.831.36 0.075 6.1 20.currents accounts .083.067.400 13.598 ).92 1.740 6.828.413 87.

566.8 19.000 30.626.Non-LTF The loan is secured against 1st specific charge of Rs. 2012 Sapphire Textile Mills Limited 37 .000 25.16 19.2 million of Unit No.1.875.1 Terms and conditions of these financings are given below: Lenders Security Mark-up rate p.5 HBL .417.733 (228.000.11 19.918) 544.6 HMBL .285 Less: Current portion shown under current liabilities (273.367 24..Non-LTF The loan is secured by first hypothecation charge over 3 Months KIBOR imported plant and machinery of the Company to the extent of plus 125 bps Rs.9 19.745 7. 2011 19.883. 2015 19. 7% 16 quarterly Aug.1.1. 6 quarterly Aug.000 400. The loan is secured against first specific hypothecation charge on plant and machinery of Rs.000..000 28.000 31. 2015 19. 19.5 19.000.1.1.1.869.714. 256 million.125.750. 6 of the Company.750.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.054 50.751.17 12.12 19.835.15 19.250.1.875.280.2 HBL .000 817.423.1.250. 34 3 Months KIBOR plus 75 bps million over two imported generators installed at Unit No. 7% 16 quarterly Feb.5 factory premises situated at Feroze Watwan.1.875.LTF-EOP 11 quarterly Dec.000 20.6 19.1. 2014 19.086 30..1 Habib Bank Limited Habib Bank Limited Habib Bank Limited Habib Bank Limited Habib Bank Limited Habib Metropolitan Bank Limited Habib Metropolitan Bank Limited MCB Bank Limited Meezan Bank Limited National Bank of Pakistan National Bank of Pakistan National Bank of Pakistan National Bank of Pakistan Samba Bank Limited United Bank Limited United Bank Limited United Bank Limited STM-5 STM-6 STM-1 STM-5 STM-1 STM-6 STM-6 STM-5 STM-6 STM-5 STM-5 STM-5 STM-5 STM-4 STM-6 STM-6 STM-5 19.333. 6 of the Company. 5 of the Company.307.869.001 18.750.3 HBL .000 36.000 12.1.1 HBL . 67 million over imported plant plus 125 bps and machinery of Unit No.1.334 31.212 50.4 19.000 75.000.000 35.155.482. 23 million of Unit No. 53.7 19.LTF-EOP The loan is secured against exclusive charge on specific plant and machinery of Rs.891 49.873 6. 7% 6 quarterly Nov.1.Non-LTF The loan is secured against 1st Specific and exclusive 3 Months KIBOR hypothecation charge of Rs.450) 702.000. of installments outstanding 4 quarterly Date of final repayment May.a (%) No.1.988.000.000.000 25.1.2 19.13 19.1..4 HBL .000 83.000 12.1.10 19.000 931.1. 2011 19.445.1.000 400.1.1.LTF-EOP The term loan is secured against hypothecation of plant and machinery at unit no.130 46.1. 2010 19 Long term finances This represents secured long term finances from the following: Loans from banking companies .579 14.000.283 19.14 19.000 14.3 19.1 19..000 109.1.1 of the Company.000 33.secured 19.000.000.113 32.

2 20.8 9.286 434..7 HMBL .453.12 NBP . The term loan is secured against hypothecation of plant and machinery at Unit No.. The term loan is secured against hypothecation of plant and machinery installed or to be installed at Unit No. The loan is secured against first specific hypothecation charge on plant and machinery of Rs.33 million of Unit No.70% 16 quarterly Jan. 23 million of Unit No.3 & 20.LTF-EOP 7% 8 quarterly Feb.LTF-EOP 7% 8 quarterly May. 534 million of Unit No..gratuity 20.927 347. 7% 4 quarterly Jan. 4 of the plus 125 bps Company. MCB . 5 of the Company. 6 of the plus 125 bps Company. of installments outstanding Lenders Security Mark-up rate p.605. 2012 Note 20 Deferred liabilities Deferred taxation Staff retirement benefits .5% No.Non-LTF Paid during the year 19.15 8 quarterly May. 2015 19. 16 quarterly June.1.17 UBL . 5 of the Company.1.LTF-EOP 8 quarterly June.1.447 360. 6 (present and future plant and machinery) of the company.. 8 quarterly May.Non-LTF The loan is secured against first specific hypothecation 3 Months KIBOR charge on plant and machinery of Rs.133 Sapphire Textile Mills Limited 38 .14 SAMBA .1. 2011 19.702. 5 of the Company. 5 of the Company.10 NBP .Non-LTF The loan is secured against first pari passu charge over fixed 3 Months KIBOR assets of amounting to Rs.LTF-EOP The loan is secured against exclusive charge on specific plant and machinery of Rs.a (%) Date of final repayment 19. 2015 19. 2011 19.Non-LTF The loan is secured against 1st registered hypothecation charge for Rs. 2013 19. The registered charge should be sufficient to cover the entire facility with a margin of 25%.1.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.751. 2012 19.11 NBP .480 96. 7% 16 quarterly July.1 & 20. 7% 6 quarterly Aug.LTF-EOP It is secured by way of first pari passu hypothecation charge of Rs. 200 million over fixed assets of Unit No.800.10 2010 Rupees 2009 Rupees 263.1.13 NBP . 2010 No.16 NBP .847 87.. 6 of the Company. 256 million.1.1.Non-LTF The term loan is secured against exclusive hypothecation 3 Months KIBOR charge over plant and machinery at Unit No. 6 of the Company. 53.1. 2012 19. plus 125 bps The loan is secured by first hypothecation charge over imported plant and machinery of the Company to the extent of Rs.1.33 million of Unit plus 1. 54 million over present & future plant & machinery of Unit No. NBP .. 2014 19.9 MBL . 1 of the Company. 53.194. 2012 19.1.Non-LTF The term loan is secured against hypothecation of plant and 3 Months KIBOR machinery at Unit No.

163.954 (2.867.3 Movement in the net liability recognized in the statement of financial position Opening net liability Expense for the year 87.840.587) 347.492 105.079 134.434 (14.822 47.1 Deferred taxation Deferred tax credits / (debits) arising in respect of: Taxable temporary differences (deferred tax liabilities) Accelerated tax depreciation allowances Deductible temporary differences (deferred tax assets) Staff retirement benefits .558.632 31.197) 87.632 73.163.706.197) 95.364.000) (37.918) 98.702.720 72.262.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.855.257 11.263 372.782) (41.253) (9.530.492 20.586) (1.751.567) (24. deferred tax liability has been worked out after taking effect of income covered under presumptive tax regime.703. 20.513 72.939 59.877 Sapphire Textile Mills Limited 39 .194.723.755.877.405.074.703.081.954) (182.000) (18.273.378.390.099.676 2.486.991 39.822 (6.847 20.194. 2010 2010 Rupees 2009 Rupees Note 20.262.365 Benefits paid during the year Closing net liability (37.unabsorbed depreciation 305.gratuity Provision for doubtful debts Provision for repair and maintenances (Generator overhauling) Unused tax credits .867.586 (182.605.339.4 Expense recognized in the income statement Current service cost Interest cost 35.673.755.513 20.328.816 8.935 6.471.854.665.257 11.723.486.2 In view of applicability of presumptive tax regime on major portion of taxable income.390.312.918) 96.020) (9.447 66.6 Historical information 2010 Present value of defined benefit obligation Experience adjustments on plan liabilities 2009 2008 2007 2006 98.816 8.480 (15.949.748) (17.417.720 95.286 47.483 (18.676 39.877.429) 548.723.286 20.513 35.649 2.840.530.5 Movement in the present value of defined benefit obligation Present value of defined benefit obligation Current service cost Interest cost Actuarial loss / (gain) Benefits due but not paid Benefits paid 95.364.783) 263.079 31.

006.923.10 Expected gratuity expense for the year ending June 30.902 18.3 21.104.997.200 14.627 59.088.285 12.643 Sapphire Textile Mills Limited 40 .593.273) 96.992.1 21.000 61.500 711.001 2.681 3.189 671.800 94.296 21.720 (2.392.026 16.279 29.040.723. Annual charges is made using the actuarial technique of Projected Unit Credit Method.437.514 3.138.570.188.8 General description The scheme provides for terminal benefits for all of its permanent employees who attain the minimum qualifying period.262.868.079.665 4.165 58.068 58.7 Reconciliation Present value of defined benefit obligation Unrecognized actuarial loss 98.643 3. 21 Trade and other payables Trade creditors Accrued liabilities Advances from customers Custom duty payable Withholding tax payable Workers' profit participation fund Workers' welfare fund Sindh development and maintenance infrastructure fee Unclaimed dividend Others 21.068 247.278 3.523 492.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.054 357.9 Principal actuarial assumption Following are a few important actuarial assumption used in the valuation.052 5.727.859 84.702.474 360.923.530 1.194. 2010 2010 Rupees 2009 Rupees Note 20.229 398. % 12% 11% % 12% 11% Discount rate Expected rate of increase in salary 20.690 2.372.576.715.687.286 20.917 21.1 These balances include the following amounts due to related parties: Amer Cotton Mills (Private) Limited Diamond Fabrics Limited Sapphire Fibres Limited Sapphire Finishing Mills Limited Reliance Cotton Spinning Mills Limited 3.513 (8.4 21.840.323 21.787 22.529. 2011 works out to Rs. 48.758.136 48.902 4.2 136.2 These balances include the following amounts due to related parties: Beirholms Sapphire A/S Denmark Sapphire Power Generation Limited Sapphire Fibres Limited Sapphire Finishing Mills Limited 1.628.417 336. 20.769.227) 87.389.262.767.879.344 415.682 233.336.447 95.114 2.769 15.

550.769.731.2 4.330 155.011 3. These facilities are renewable on expiry dates. This represents cheques issued by the Company in excess of balance at banks which remained unpresented till June 30.648 74.349 (61.672 Sapphire Textile Mills Limited 41 .052 21.723. plant & machinery and export bills under collection. However.1 23.000 793.677) 76.183.575 76.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.295.778.627 Less: Payments during the year Balance at the end of the year (18.923.142. 9.684.787 16. 2010.769. These carry mark up ranging from 7.478.long term finances .433 23.2 24 Provision for taxation Balance at the beginning of the year Provision made for current year .473.599 137.005 million (2009: Rs.845.248 3.873 66. nil million (2009: 231 million) on account of foreign currency loan translated into local currency at exchange rate prevailing on the reporting date and are payable in foreign currencies.680. decision of the Honorable Sindh High Court dated 17 September 2008 in which the imposition of levy of infrasture cess before 28 December 2006 has been declared as void and invalid.510.105 3.769.854.732.975.628 Less: Adjusted advance tax during the year against complete assessments (76.net 76.226 60. 8.004.1 2.176. 2010 2010 Rupees 2009 Rupees Note 21.5% to 15.813.114.774.174 2. 23.294.525 3.a.618.short term borrowings 8.684. the Excise and Taxation Department has filed an appeal before the Honorable Supreme Court of Pakistan against the order of the Honorable Sindh High Court.4 The Company has filed a suit against levy of Infrastructure fee.105 Book overdraft 23.052 58.427.052 16.521 12.476.000.788 59.052 16.79% (2009: 7. Accrued interest / mark-up Accrued interest / mark-up on secured: .194.840) 58. payable quarterly.160.1 Aggregate facilities amounting to Rs.185 4.260 million) were available to the Company from banking companies.558 22 23 Short term borrowings Short term loan Running finance under mark-up arrangements 23.769.854. It includes Rs.750 77.088.891.672 183. book debts.727.3 Workers' profit participation fund Balance at the beginning of the year Allocation for the year Interest on fund utilized in the Company's business 16.866.997.387. These are secured against hypothecation charge on stock in trade.707.956 260.088.228 143.052 16.787 1.769.630 1.5% to 17%) p.402) 184.

2 Export sales .932 7. 2010 2010 Rupees 2009 Rupees 25 25.899 1.822 4.291.605.028.227 25.284.239 3.1 26.846.031 22.292 230.138.471 1.425 7.383.523 201.830.248.357.462 3.910 1.556.182.716 17.015.945 Export rebate Duty drawback Processing income 26.111.781.934.742.4 7.Home textile products Direct export In-direct export 1.809.259.951 3.753.167 1.503.639.722.270.3 26.202 90.285.1 Export sales .352.363.183.864.086 3.848 69.Yarn Direct export In-direct export 5.458.257 11.744 26.212.626.502.259.103.061 988.735.183 14.2 Commitments Confirmed letter of credit in respect of: .276 2.738 14.712 5.902.744 1.187.238.711.217 73.Fabric Direct export In-direct export 1.624 3.428.978.826 3.448 1.794.323 7.615.708.387 234.122 2.843.735.901.175 214.303 225.665.738 3.108 Local Sales 2009 2010 Total 2009 26 26.738 1.992.151 1. Sales and services Export Sales Note 2010 2009 2010 Rupees Gross sale of goods Yarn Fabric Home textile products Raw material Waste Services 26.840 19.445.239.032.604.236.070.620.458.712 307.910.158.257 6.080.524.090.992.400.523 1.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.120 121.142 40.155.422.081.756 11.440 10.414.448 26.114.2 26.200 140.448 1.950 25.3 The Subsidiary company Sapphire Renewable Solutions (Private) Limited has filed on 3rd September 2010 an application with SECP for striking off the Name of the Company U/S.744.155.440.847.092.291.584.816.167.006 146. 439 of the Companies Ordinances.984.996 4.823 104.111.494 321.212.138.843.080.069 7.202 Sapphire Textile Mills Limited 42 .738 10.212. due to continued losses.363.142.stores and spares 218.895 2. 1984.950.636 15.455 155.284.080.155.885.324.688.282.raw material .732 508.061 1.422.793.plant and machinery .1 Contingencies and commitments Contingencies Guarantees issued by banks on behalf of the Company Note 233.498.403 1.609.183.793.830.514.6 3.950.403 79.899 1.202 1.3 Export sales .246 15.793.061 3.386 23.418.209 127.259.

741 94.082 2.916.412 (784.6 Waste sales includes comber noil sales Rs.058 (133.499 5.941.291 202.071) 11.025.788.257 570.117.520. 2010 26.5 26.4 4.167.434) 9.168 Closing stock (1.562 823.3 27.1 8.860.760).494.869 39. 86.211.686.844.032.698 8.815.094.547 321.688 209.165 211.298 million loss) has been included in export sales.012.520 27.332 (2009: Rs.653.823 6.946.283.874.O 3(1)TID/09-P-I Dated 1st September 2009 in order to encourage the exporters.939 254.643.492) (6.982 1.494.502 34.946.470 140.690 2010 Rupees 2009 Rupees 27.788.367 439.230) 6.514.438.404 412.898.380.828 14.729.938 10.175 288.521 (1.1 Raw material consumed Opening balance Purchases 1.180.986 9.253.428 11.974 155.676 3.704.715 127.432.692.467.834) 11. Note 27 Cost of sales and services Raw material consumed Packing material consumed Stores and spares consumed Salaries. The duty drawback has been given by Ministry of Textile Industries from government of Pakistan vide S.062 28.165 2.355 3.982.061 387.781.659.684 32.568.909 907.198.414. 27.581 15.065. wages and benefits Fuel.R.686.549 Work in process Opening stock Closing stock Cost of goods manufactured Finished goods Opening balance Finished goods purchased: Cotton Yarn Fabrics Closing stock 6.229.366. Exchange gain/loss due to currency rate fluctuations relating to export sales amounting to Rupees 17.015.423.272 2.971.747.545.239.883) 10.873.003) 8.750.817.450.687 14.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.039.880 13.268 351.189 million gain (2009: Rupees 36.959 808.760.660.933 3.577 95.093 3.351.291 Sapphire Textile Mills Limited 43 .153.240 368.326) (62.677 (570.249. power and water Other manufacturing expenses Repairs and maintenance Vehicle running expenses Traveling and conveyance Insurance expenses Rent.861 391.392.3 133.862.698.023. rates and taxes Fees and subscription Communication expenses Printing and stationery Legal and professional charges Other expenses Depreciation expenses 27.2 & 27.222.869.474 1.596.948 750.465.230 8.633.4 26.492 (196.423.421 700.898.412.911.911.399.577.883 597.462.031.500.500.175.659.691.297 324.

378 32.674.797 10.570.255 573.030.062 28 Selling and distribution expenses On export sales Export development surcharges Regulatory duty on export Insurance Commission Ocean freight and forwarding 17. Salaries and benefits include Rs.837.917) in respect of provident fund contribution.532.355 22.364.533 1.812.985 12. 1.249.056 194.269.810.309. Note 27.448 1.836 96.972 28.597 2.712.962.011 4.006 1.640.874.2 27.524.309 1.028 34.862) in respect of provident fund contribution. 2.367.214.031.750.3 Salaries.420 (4.065.079 (2009: Rs.223.787 32.952 29.454 14. 1.984. wages and benefits include Rs.664 3.1 Salaries and benefits include Rs. 39.817.884.561 35.881 22.319.689.614 224.656 16.781.383 9.196.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30. 1. bleaching and bale pressing charges Yarn dyeing and bleaching charges Fabric dyeing.690.144.867.772 351.4 Other manufacturing expenses Cotton dyeing.476 149. Sapphire Textile Mills Limited 44 .656 91.453.803.492) in respect of post employment benefits (gratuity).452 250.902.219 (2009: Rs.815.1 42.074.322.945 324.145.127 Other distribution cost Salaries and benefits Rent and utilities Communication Traveling.301.800 64.590 On local sales Inland freight and handling Commission 42.741 106. knitted and processing charges Yarn doubling charges Stitching and other charges 2010 Rupees 2009 Rupees 148.349.928.342.672 397.932 85.897.710 153.499 8.274.602.127.761 107.247.850) 668.445 221.253 1.955.046.148 9.585.973 610.471 55.552 1.252. 2010 27. 47.554 (2009: Rs.608. bleaching.181.427.333 1.168 4.796 2.118.175 468. conveyance and entertainment Repairs and maintenance Fees and subscription Samples and advertising Printing and stationery Others Grant received from TDAP 28.136 152.

986) 748.126.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.721 1.544 6.008.787 93.114.444 6.893.542.077.853. rates and utilities Communication Printing and stationery Traveling.651 122.774 668.811.074 3.323.436 9.787 29.282 (2009: Rs.083 5.323 13.312.100 1.034 12.248 2. conveyance and entertainment Motor vehicle expenses Repairs and maintenance Insurance Expense Legal and professional charges Fees and subscription Computer expenses Advertisement Others Depreciation 2010 Rupees 2009 Rupees 29.888.130 7.0 million).712 8.949.037 847.367 2.343.net 550.559) in respect of provident fund contribution.502.984 4. Sapphire Textile Mills Limited 45 .096.304 21.089.690 15.618.215.245 2.120 112. 2010 Note 29 Administrative expenses Directors' remuneration Directors' meeting fee Salaries and benefits Rent.906 135.031.039.520 633.514 73.888.200 320.short term finances .130.775.861 30 Finance cost Interest / mark-up on .660 5.3 30.1 30.563 4.Workers' profit participation Bank charges.365.948.805.583 219.000 71.812.long term loans .965.020 2.690 3.082.6 million (equivalent to USD 7. Research and development support Support on account of research and development Less: Utilization Product development Professional consultancy Market research Participation in exhibitions 1. 2.358 2.401. 2.221.641.466 5. the company is entitled to receive 6 months KIBOR on notional amounts and is required to pay 6 months LIBOR plus spread ranging from 0.3 8.903.042.018.75% to 0.255.200. the company has entered into with Royal Bank of Scotland (Formerly ABN Amro Bank N.104.771.1 This represents the fair value of two separate Cross Currency Interest Rate Swap agreements and gain on reset date of agreements.778 6.218 118.989.089. 428.000 54.450 9.178.252 1. commission and others charges Realized (gain)/loss on remeasurement of derivative financial instruments .918.861 9.450 4.697 56. In addition to this the company is required to pay exchange difference arising due to fluctuation in USD/PKR rates between reset and the settlement dates.253.500.788 107.85% on USD notional amount.000 5.949.358 6.V Pakistan) and Standard Chartered Bank ( Pakistan ) Limited at the aggregate notional amount of Rs.186.493. Under the terms of swap agreements.980 7.615.405 1.933 (4.687 1.1 4.779 6.083 3. at each reset date.2 Salaries and benefits include Rs.678 7.264.1 29.

ANNUAL

REPORT

2010

NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2010 30.1.1 During the year total gain realized Rs. 4.127 million (2009: Rs. 5.958 million) at the reset date. These transactions have been remeasrued to fair value at the end of the year resulted in a loss of Rs. nil (2009: Rs. 15.499 million). The resulted loss of Rs. nil (2009: Rs. 9.542 million) has been charged to finance cost after net off gain realized during the year of Rs. 4.127 million (2009: Rs. 5.958 million).
2010 Rupees 2009 Rupees

Note 31 Other operating expenses Workers' profit participation fund Workers' welfare fund Auditors' remuneration Donations Depreciation on investment property Amortization of intangible asset Loss on sale of investments Loss due to remeasurement of held for trading investments Provision for doubtful debts Impairment loss on associated company Impairment loss on subsidiary company Exchange loss on - foreign currency account - short term foreign currency loan - monetary assets 21.3 31.1 31.2 5.3 6.2

58,088,787 22,767,627 2,287,444 21,069,258 2,169,165 1,734,969 119,304,865 15,380,120 8,760,679 1,329,859 5,969,871 3,911,900 262,774,544

16,769,052 5,593,136 1,490,795 2,637,556 1,949,998 1,206,989 23,132,735 15,822,463 1,625,179 70,227,903

31.1

Auditors' remuneration Audit fee Half yearly review fee Code of corporate governance review fee Other certification / services Out of pocket expenses 1,000,000 302,500 78,045 895,349 11,550 2,287,444 896,200 275,000 78,045 230,000 11,550 1,490,795

Note 31.2 Donations include the following in which a director is interested: Name of director Mr. Mohammad Abdullah Mr. Yousuf Abdullah Mr. Shahid Abdullah Mr. Nadeem Abdullah Mr. Amer Abdullah Mr. Mohammad Yamin Mr. Mohammad Abdullah Mr. Shahid Abdullah Mr. Nadeem Abdullah Interest in donee Director Director Director Director Director Director Trustee Trustee Trustee Name and address of donee Abdullah Foundation 312, Cotton Exchange Building, I.I. Chundrigar Road, Karachi.

2010 Rupees

2009 Rupees

19,000,000

600,000

Jamal-ud-din Fatima Charitable Trust 149, Cotton Exchange Building, I.I. Chundrigar Road, Karachi.

800,000

650,000

Sapphire Textile Mills Limited

46

ANNUAL

REPORT

2010

NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2010
2010 Rupees 2009 Rupees

Note 32 Other operating income Income from financial assets / liabilities Dividend income - from other companies - from associates companies Gain on sale of investments Gain due to remeasurement of held for trading investments Profit on saving and deposit accounts Rental income Income from power generation Scrape sales Exchange gain on - short term foreign currency loan - monetary assets Income from non-financial assets Gain on sale property, plant and equipment - net Written back provision - for excise duty on loan and leases - for excise duty on electricity - for unclaimed TFC's

32.1

32.2

116,023,354 478,521 33,978,504 715,877 148,852 13,824,279 10,310,796 12,117,599 -

100,498,478 10,625,846 70,562 10,154,210 5,717,658 11,461,320 954,890 880,500

7,256,523 194,854,305

4,498,792 4,811,742 3,393,355 162,678 153,230,031

32.1

Dividend income from associated companies Reliance Cotton Spinning Mills Limited Sapphire Fibres Limited 478,521 478,521 995,000 9,630,846 10,625,846

32.2

Income from power generation Sales Cost of electricity product: Salaries, wages and benefits Stores and spares consumed Fuel, power and water Insurance expenses Rent, rates and taxes Repairs and maintenance Vehicle running expenses Traveling and conveyance Communication expenses Fees and subscription Depreciation expenses Finance cost Other expenses 11,116,830 11,563,536 141,277,067 1,680,323 162,635 6,712,785 307,625 147,786 87,631 8,117,293 29,881 58,999 181,262,391 10,310,796 5,000,102 3,399,201 62,564,583 90,953 4,785,196 108,897 55,829 50,041 2,000 4,773,479 91,391 80,921,672 5,717,658 191,573,187 86,639,330

4.3

Sapphire Textile Mills Limited

47

ANNUAL

REPORT

2010

NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2010

Note 33 Taxation Current - for the year - for prior years'

2010 Rupees

2009 Rupees

184,774,226 (850,270) 183,923,956 (83,854,367) 100,069,589

77,278,127 (94,528) 77,183,599 17,038,294 94,221,893

Deferred

33.1

Reconciliation between the average effective tax rate and the applicable tax rate. 2010 Percentage Applicable tax rate Tax effect of expenses that are admissible / inadmissible in determining taxable profit Effect of difference in tax rates under normal tax regime and presumptive tax regime Effect of income exempt for tax purpose Effect of adjustment in respect of deferred taxation Effect of change in prior years' tax 35.00 8.00 (24.40) (2.03) (7.52) (0.08) 8.97 35.00 10.56 (19.52) 2.15 6.22 (0.03) 34.38 2009

2010 (Rupees) 34 Earnings per shares Profit after taxation 1,015,544,117

2009

179,841,760

Number of shares Weighted average number of ordinary shares 20,083,140 (Rupees) Earnings per share - basic and diluted 34.1 There is no dilutive effect on basic earnings per share. 50.57 8.95 20,083,140

Sapphire Textile Mills Limited

48

236 Increase / (decrease) in current liabilities Trade and other payables 273.563.248) 82.638. plant and equipment Dividend income . The Company in the normal course of business carries out transactions with various related parties.498. Sapphire Textile Mills Limited 49 .240 73.126.206.336. directors and key management personnel.521) 47.associates Provision for gratuity Provision for doubtful debts Exchange differences Fair value adjustment made in value of investment Realized (gain)/loss on remeasurement of derivative financial instrument Financial expenses Profit on deposit and held to maturity investments Impairment loss on associates company Impairment loss on subsidiary company Written back provision for excise duty on loan and leases Written back provision for excise duty on electricity Written back unclaimed TFC's Rental income Operating cash flow before changes in working capital Changes in working capital (Increase) / Decrease in current assets Inventories Trade debts Loans and advances Trade deposits and short term prepayments Other receivables 379.450.463 9.998 65.492 (210.852) 15.878.363) 684.978.625.650) 1.025 37 37.734.525) 115.079 119.393.706 2009 Rupees 274.155.562) (4.278.653 Note 35 Cash generated from operations Profit before taxation Adjustments for non-cash charges and other items: Depreciation Depreciation on investment property (Gain)/Loss on sale of other financial assets (Gain)/Loss on sale of long term investments Amortization of intangible assets (Gain)/Loss on sale of property.815.256.523) (116.132. Significant balances and transactions with related parties are as follows.120 8.357 28.1 Related party disclosures Disclosure of transactions between the Company and related parties.304.630 (715.981.354) (478.510.822.401 87.742) (3.149 (4.080.989 (4.465.683 1.319) 9.263.760.478) (10.986) 752.513 36 Cash and cash equivalents Cash and bank balances Temporary overdrawn balances 120.369 22.010.443 (390.351) (264.926 (4.277.679 (13.532 749.638.774.294.380.211) 15.others Dividend income .038. wholly owned subsidiary.364.891.946.154.279) 2.612 (148.846) 39.505.115.877.027.826.409. The related parties comprise associated companies (due to common directorship).211.240. 2010 2010 Rupees 1.504) 1.824.138.097) (672.320 1.613.949.037 838.498.385 (42.867.745) (23.355) (162.969 (7.488 (4.792) (100.346 2.165 (33.267 (70.678) (10.811.169.627 2.063.542.023.164 11.288.968.865 11.205.096.814 2.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.556 396.025.210) 1. Amounts due to/from related parties are shown in the relevant notes to the financial statements.877) (4.

008.764 95.950.800.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30. plant and equipment Sapphire Finishing Mills Limited Donations Abdullah Foundation Jamal-ud-din Fatima Charitable Trust Related party 1.045 13.200.275 8.860.918 430.396 305.944.846 10.515 88.539.928.300 Dividend received Reliance Cotton Spinning Mills Limited Sapphire Fibres Limited Associate Associate 478.483.092.395 41.786 344.625.340 57.136.502.548 313.104 13.000 1.250.311 2.000 600.521 478.813 200.700 558.354 4.865 690.033.539.471.197.513 1.010 58. services provided and reimbursement of expenses Amer Cotton Mills (Private) Limited Beirholms Sapphire A/S Denmark Diamond Fabrics Limited Neelum Textile Mills Limited Reliance Cotton Spinning Mills Limited Sapphire Fibres Limited Sapphire Finishing Mills Limited Related party Associate Associate Related party Associate Associate Associate 870.056.632 296.007 Rent and other expenses Yousuf Agencies (Private) Limited Sale of property. 2010 2010 Rupees 2009 Rupees Nature of transaction Relationship with the Company Note Sales.100.778.881.628 558.625 108.705.759 995.722 487.000 1.830 7.812.650 107.000.671.723 13.308 163.678 1.000 Associate Related party Related party 12.000 9.001 2.409.363 408.686 128. services received and reimbursement of expenses Amer Cotton Mills (Private) Limited Diamond Fabrics Limited Neelum Textile Mills Limited Reliance Cotton Spinning Mills Limited Sapphire Fibres Limited Sapphire Finishing Mills Limited Sapphire Renewable Solutions (Pvt) Limited Sapphire Power Generation Limited Related party Associate Related party Associate Associate Associate Subsidiary Associate 3.468 2.000 1.488.981.606.346 10.189 165.633.030 1.521 Sapphire Textile Mills Limited 50 .161 4.632 621.419 18.000 800.336.615 4.268.887 316.000 19.749 7.917 879.736 220.000 650.748 4.917 161.761 92.028 Purchases.408.891 77.947.437.396.171.520 5.540.630.846 Dividend paid Amer Cotton Mills (Private) Limited Crystal Enterprises (Private) Limited Diamond Fabrics Limited Galaxy Agencies (Private) Limited Nadeem Enterprises (Private) Limited Neelum Textile Mills Limited Reliance Cotton Spinning Mills Limited Reliance Textiles Limited Sapphire Agencies (Private) Limited Sapphire Power Generation Limited Yousuf Agencies (Private) Limited Related party Related party Associate Related party Related party Related party Associate Related party Related party Associate Related party 1.465 7.490.582 873.857 24.012.936 169.670 89.472.000 19.669 481.036.082.

584 3.157.320.000 6.863.400.000 1.372.069 3 360 84.232 119.839 92.615 3.450.441 220 206 3 360 51.200.331 73.000 1.000 3.625 6.600.600.357 39. Sapphire Textile Mills Limited 51 .ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.639 The capacity of this unit is indeterminable due to multi product involving varying processes of manufacturing and run length of order lots. Note 39 REMUNERATION OF CHIEF EXECUTIVE.445.238.877.146.592 120.570 937.242.110 72.000 2.725.000 1 Number of person Director Remuneration Rent and utilities 1 2.887 10.300 220 206 3 360 51.604 1.200.000 1.238.912 40.932.374 2.945. 2010 Note 2010 2009 38 Plant capacity and actual production Spinning units Total number of spindles installed Average number of spindles worked Total number of rotors installed Average number of rotors worked Number of shifts worked per day Total days worked Installed capacity after conversion into 20/s lbs Actual production after conversion into 20/s lbs Weaving unit Total number of looms installed Average number of looms worked Number of shifts worked per day Total days worked Installed capacity at 50 picks per inch of fabric square meters Actual production converted at 50 picks per inch of fabric square meters Home Textile Product unit 120.000 2.312 118.495 13.400.000 1.000 5.695.227 19.062 3 360 82.000 3.000 1 Number of person Executives Managerial remuneration House rent Cost of living allowance Bonus Medical Utilities Leave encashment and other benefits 1 42.000 3.178 80.001.266.684.600.763.438 8.110 73.500 36.212 56 56 Number of persons Number of executives provided with the Company maintained cars 46 46 The Chief Executive and one Director were also provided with cars maintained by the Company and telephones at residence.400.871.514.538 1.120 3.627.123.175.200.120 3. DIRECTOR AND EXECUTIVES Chief Executive Remuneration Rent and utilities 2010 Rupees 2009 Rupees 3.920 92.

3.804 34.532 million).018 40.251.592. Australia and North America. 2.770.276 810.2 40. other receivables.106.859.692 5.866.130.224.663 million (June 30.706.Credit risk .1.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.209 7.663.412. 3.988.336.860 The majority of export debts of the Company are situated in Asia.003.314 2009 Rupees 833.651.889. 2010 40 FINANCIAL INSTRUMENTS The Company has exposures to the following risks from its use of financial instruments: 40.075 2.251.944.681 273.512 140.560 9.1 40. Europe.675 million (June 30. The Board is also responsible for developing and monitoring the Company's risk management policies. 2009 : Rs.408.379 1.569 750.360.803.144. Out of total financial assets of Rs. 40.179 1. and arises principally from the trade debts.651.1 Credit risk Exposure to credit risk Credit risk is the risk of financial loss to the company if a customer or counterparty to a financial instrument fails to meet its contractual obligations.314 12.267. 2010 Rupees Long term investments Long term loans and advances Long term deposits Trade debts Loans and advances Trade deposits and short term prepayments Other receivables Other financial assets Cash and bank balances 1. 2010 Rupees Domestic Export 603. loans and advances.Liquidity risk . financial assets which are subject to credit risk aggregate to Rs.106.275.1.859.961 38. The carrying amount of financial assets represents the maximum credit exposure.1 40.3 .2 The maximum exposure to credit risk for trade debts at the reporting date by geographical region is as follows.628.933.239 117.808.617 648.926.783 1.514 80.697 1.824.934 490.375.209 13. Sapphire Textile Mills Limited 52 .723. 2.Market risk The Company's Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework.235 3.803. other financial assets and cash and bank balances.824. trade deposits and short term prepayments. 2009 : Rs.944 million). The maximum exposure to credit risk at the reporting date is as follows.860 19.107 2009 Rupees 1.

as these comprise amounts due from old customers.301.873 58.552 126. All receivables past due are considered good.197.251.708.083.874 155.675.274 59.545.558 3.362 5.794 83.224.973 14.836.222 352.436 168.177 11.30 days Past due 31 .473.939.277 1.714 117.568.723.90 days Past due 91 .362 4.477 1.443 11.785.301. Financial liabilities in accordance with their contractual maturities are presented below: 2010 Carrying amount Contractual cash flow Up to 1 year Rupees Long term finances Trade and other payables Accrued interest / mark-up Short term borrowings 817.314 40.859.1.754 20.131 98.696.462.956.135.859.708.675.602 859.891 360.181 320.874 155.003 11.473.882.634.030.562.656.558 3.866.237.592.977.105 4.727.728.126 1.651.874.117.351 20.972 11.60 days Past due 61 .558 3.350 1.521 3.1 year More than one year 1.867 74.651.556.989 4.251.087 79.141 526. 2010 40.521 3.845.013.860 Credit quality of counter parties is assessed based on historical default rates.637. Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credits facilities.867 74.801 320.867 74.999 Between 1 to 5 years 5 years and above 2009 Carrying amount Contractual cash flow Up to 1 year Rupees Long term finances Trade and other payables Accrued interest / mark-up Short term borrowings 931.197.733 320.177 859.662.758 16.521 3.845. which have been re-negotiated from time to time and are also considered good.2 Liquidity risk Liquidity risk is the risk that an entity will encounter difficulties in meeting obligations associated with financial liabilities.314 2009 Rupees 771.948 1.082.708. 40.443 Between 1 to 5 years 5 years and above Sapphire Textile Mills Limited 53 .267.856.628.892 630.185 5.251.982.869.533 921.721 22.956.4 The aging of trade debts at the reporting date as follows: Not past due Past due 0 . The management believes that allowance for impairment of receivables past due is not necessary.132.106.813.701.321.684.285 526.514.142 526.728.368.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.845.874 155.324.418 1.216 247.723.922.280.989 5.939.999 630.106.706 31.657 3.723.930.186.237. The Company's treasury department maintains flexibility in funding by maintaining availability under committed credits lines.892.3 The maximum exposure to credit risk for debts at the reporting date by type of product is as follows: 2010 Rupees Yarn Fabric Home textile product Energy Raw material Waste Processing services Others 816.1.860 602.728.473.778 104.940.778 991.309.237.819 203.

969) EURO (637.100.40 / 85.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.323.813.601) 35.567 2.003) (1.58 2009 81.206.825 6.30 114.822 159.738.832.3 2009 Rupees Short term borrowings (Foreign currency loan) Accrued mark-up on (Foreign currency loan) 231.605.259) (18. interest rates and equity prices will affect the Company's income or the value of its holding of financial instruments.736) (47.174 777.402 US $ 2.180) 307.625.678) (15.208 565.970) 1.1 Currency risk The Company is exposed to currency risk on import of raw materials.180 1.206.60 104.234) (12.283) (778.489.234) (6.854.672) 2.250 EURO (174.444 (199.3.800.585 1.860.847.822 40.091.267.603.798) (42.82 Sapphire Textile Mills Limited 54 .889 JPY 159.375. Market risk Market risk is the risk that changes in market price. such as foreign exchange rates.881.467.354 / 114.945 Trade debts Bank balances Gross statement of financial position exposure Outstanding letters of credit Forward exchange contracts Net Exposures (273.706 The following significant exchange rates have been applied: Reporting date rate 2010 US $ to Rupees Euro to Rupees 85. stores & spares parts and export of goods mainly denominated in US Dollar and Euro.642) (649.561) US $ (6.665.370.143.175 155. The Company's exposure to foreign currency risk for US Dollar and Euro is as follows: 2010 Rupees Short term borrowings (Foreign currency loan) Accrued mark-up on (Foreign currency loan) Trade debts Bank balances Gross statement of financial position exposure Outstanding letters of credit Forward exchange contracts Net Exposures (648. 2010 40.706 38.303 9.2.876) 540.1 The contractual cash flow relating to the above financial liabilities have been determined on the basis of mark-up / interest rates effective at the respective year-end.379. 40.179) (1.10 / 81.097 4.502) (663.598) (175.222 (140.870 (3.001 (5.033) 234. The rates of mark-up / interest have been disclosed in the respective notes to these financial statements.845.741.33 / 104.119.771 232.227 373.379) JPY 38.615.

Gain Profit & loss Rupees 58.50% 7.796.5% 15.105 931.684.5% to 17.733 3.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.280. This analysis assumes that all other variables.602 2.016.285 3.Gain Effect in Euro . Equity As at June 30. on the basis that all other variable 2010 Effective rate Variable rate instruments Financial liabilities Long term finances Short term borrowings 7. The analysis is performed on the basis for 2010.727.00% to 15.729. performed on the basis for 2010. in particulars interest rates.330.866.00% to 15. 2010 40.185 Sapphire Textile Mills Limited 55 .3.Gain As at June 30.473.403 - 6.50% 7. would have increase / (decrease) equity and profit and loss account by the amounts shown below.869.79% 2009 2010 2009 Carrying Amount 7. remain constant. 2009 Effect in US Dollar .2 Sensitivity analysis A 10 percent strengthening of the Rupees against US Dollar at June 30. 2010 Effect in US Dollar .903 6.Gain Effect in Euro .254 10 percent weakening of the Rupees against the above currency at 30 June would have had the equal but opposite effect on the above currencies to the amounts shown above.00% 817.

240.939 10. Significant reclassification includes the following. 2010 NADEEM ABDULLAH Chief Executive Sapphire Textile Mills Limited 56 .031.918 87.459.322.070. 2010 2010 Rupees Total borrowings Less: Cash and bank balances Net debt Total equity Total capital 4.336. Note 15 27 21 27 Reclassification From Other financial assets Stores and spares consumed Trade creditors Stores and spares consumed To Long term investments Fuel.856.287.811.687. wherever necessary. Minor reclassifications were made in balance sheet for better presentation and understanding.785. 2010 proposed a cash dividend of Rs. 100.514 202.464 5.710) at the rate of Rs. 42 Corresponding Figures Comparative information has been rearranged and reclassified.146.906.216.700 (2009: Rs. reclassifications were made in balance sheet for better presentation and understanding.962 Percentage Gearing ratio 41 51 41 Non adjusting event after balance sheet date The board of directors in its meeting held on October 06.investment Diesel expenses for power generation Advances from customers Packing material consumed Rupees 1.366.762.992.163.430 4. 2010 MOHAMMAD ABDULLAH Chairman / Director Karachi: Dated: 06th October. 30.5) per ordinary share of Rs.ANNUAL REPORT 2010 NOTES TO THE FINANCIAL STATEMENTS For the year ended June 30.488 4. Proposed dividend is subject to approval by shareholders at the forthcoming Annual General Meeting and has not been included as a liability in these financial statements.547 43 GENERAL The figures have been rounded off to the nearest Rupees.568 21. 10 each. This will be accounted for subsequently in the year of payment.415. 1.171.124. Significant reclassification includes the following.291.571.403 2009 Rupees 4.659.390 120. power and water Advances from customers Packing material consumed Nature MCB Bank Limited .459 2.926 4. for better presentation and comparison. 5 (2009: Rs.532 9.553. 44 DATE OF AUTHORIZATION FOR ISSUE These financial statements were authorized for issue by the Board of Directors of the Company on 06th October.

001 170.001 35.167 65.105.000 50.870.110.065.636 62.183 564.000 65.000 610.585 26.258 2.000 25.289 2.001 2.000 180.000 20.001 1.000 15.001 60.001 560.001 595.001 265.242 600.920 144.140 1 101 501 1.280.001 635.438 27.659 2.185 77.000 215.083.000 640.000 600.251 62.061.594 298.893 756.591 75.075.400 268.086 232.000 140.000 275.001 5.000 604.001 375.001 20.374 178.000 105.001 605.522 586.000 2.077.063 635.000 1.001 175.ANNUAL REPORT 2010 PATTERN OF SHAREHOLDING AS AT 30TH JUNE.001 75.000 845.000 80.000 10.000 175.001 600.001 2.785 138.000 925.000 2.099 108.000 5.000 Sapphire Textile Mills Limited 57 .001 920.001 2.000 480.102 133.001 65.961 13.000 75.001 475. 2010 NUMBER OF SHARE HOLDERS 340 49 36 41 15 2 2 3 2 1 1 1 2 1 1 2 1 1 1 1 1 1 1 1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 524 FROM TO TOTAL SHARES HELD 6.506 843.000 250.123 924.000 70.283 46.060.000 605.001 100.000 2.873.080.001 210.291 31.001 130.001 100 500 1.000 120.900 211.001 115.128 2.275.000 565.000 2.189 88.001 295.088 1.050 272.275.106 Total : 20.001 15.611 609.106.162 170.001 840.001 270.000 270.001 585.000 300.001 135.281 103.001 245.039 475.000 380.875.001 2.100 248.001 70.001 10.001 45.000 590.000 135.000 40.

CEO.26 4.85 0.89 24. 2010 CATEGORY OF SHAREHOLDERS Director.ANNUAL REPORT 2010 PATTERN OF SHAREHOLDING AS AT 30TH JUNE.07 100.629 20.977. spouses and Minor Children Associated Companies.871.083 1.905 13. related parties NIT & ICP Banks & Modaraba General Public (Local) Public Sector Companies SHARES HELD 12. undertakings.30 9.00 Sapphire Textile Mills Limited 58 .63 1.824 4.140 PERCENTAGE 59.970 262.083.729 929.027.

Amer Cotton Mills (Private) Limited Sapphire Power Generation Limited Diamond Fabrics Limited Reliance Cotton Spinning Mills Limited 2061258 586242 604611 272594 71643 475183 5367 38056 72542 21000 77281 178900 211100 133785 62167 B) NIT & ICP National Bank of Pakistan Trustee Department National Investment Trust Limited 924088 5882 C) DIRECTORS.ANNUAL REPORT 2010 PATTERN OF SHAREHOLDING AS AT 30TH JUNE. Mrs. Mr. 2010 A) ASSOCIATED COMPANIES. UNDERTAKINGS AND RELATED PARTIES Sapphire Agencies (Private) Limited. Mrs. Mohammad Younus Mr. Shamshad Begum Mr. Shamshad Begum Mr. Shahid Abdullah. Usma Yousuf Mr. Ambareen Amer 609063 20738 600000 2077128 378057 2106659 2275106 635506 1350 564522 15000 9700 1883 1000 Sapphire Textile Mills Limited 59 . Shireen Shahid. Mohammad Abdullah. Nadeem Enterprises (Private) Limited Galaxy Agencies (Private) Limited Neelum Textile Mills Limited. Mohammad Yamin. Yousuf Agencies (Private) Limited Amer Cotton Mills (Private) Limited Reliance Textiles Limited Reliance Cotton Spinning Mills Limited Sapphire Power Generation Limited Amer Cotton Mills (Private) Limited Sapphire Agencies (Private) Limited. Mrs. Shahid Abdullah. CHIEF EXECUTIVE OFFICER. Yousuf Abdullah. Yousuf Abdullah. THEIR SPOUSES AND MINOR CHILDREN DIRECTORS & THEIR SPOUSES Mrs. Amer Abdullah. Ambareen Amer Mr. Mrs. Mrs. Mr. Mr.

Amer Abdullah. CHIEF FINANCIAL OFFICER. Shireen Shahid Mr. Noshaba Nadeem. Mrs. Mrs. Mrs. CHIEF EXECUTIVE OFFICER. 2077128 2275106 2108542 2138539 F) TRADING IN THE SHARES OF COMPANY DURING THE YEAR BY THE DIRECTORS. MODARABAS & MUTUAL FUNDS BANKS National Bank of Pakistan National Bank of Pakistan MODARABAS Guardian Leasing Modaraba Guardian Leasing Modaraba 1890 7000 138162 115031 E) SHAREHOLDERS HOLDING 10% OR MORE Mr. Mr. NON BANKING FINANCIAL INSTITUTIONS. 2010 CHIEF EXECUTIVE OFFICER & HIS SPOUSE Mr. Noshaba Nadeem. COMPANY SECRETARY AND THEIR SPOUSES AND MINOR CHILDREN. INSURANCE COMPANIES. Nadeem Abdullah. NIL Sapphire Textile Mills Limited 60 . Nadeem Abdullah.ANNUAL REPORT 2010 PATTERN OF SHAREHOLDING AS AT 30TH JUNE. DEVELOPMENT FINANCIAL INSTITUTIONS. 1873289 843123 15400 300 D) BANKS. Yousuf Abdullah Sapphire Agencies (Private) Limited.

do hereby appoint of or failing him of a member of SAPPHIRE TEXTILE MILLS LIMITED. 2010 Signature__________________________________________ (Signature should agree with the specimen signature registered with the Company) NOTICE 1. Affix Five Rupee Revenue Stamp Signed this_______________________day of October. 4. Sapphire Textile Mills Limited 61 . vide Registered Folio No. Karachi and or at any adjournment thereof. 2010 at 11:45 a. Cotton Exchange Building. as my/ our proxy to act on my/ our behalf at the 42nd Annual General Meeting of the company to be held on Thursday. No proxy shall be valid unless it is duly stamped with a revenue stamp worth Rs. Attested copies of CNIC or passport of the beneficial owners and the proxy shall be furnished with the proxy form. 5. 2. The proxy from shall be witnessed by two persons whose names.I. This form of proxy duly completed must be deposited at the Registered Office of Company atleast 48 hours before the time of holding the meeting. ii). Chundriger Road. Power of attorney and other authority (if any) under which this proxy form is signed then a notarially certified copy of that power of attorney must be deposited along with this proxy form.ANNUAL REPORT 2010 FORM OF PROXY I/WE Of a member(s) of SAPPHIRE TEXTILE MILLS LIMITED and a holder of ordinary shares. I. 3. at 212. addresses and CNIC numbers shall be mentioned on the form.m. 5/In the case of Bank or Company. the proxy form must be executed under its common seal and signed by its authorized person. The proxy shall produce his original CNIC or original passport at the time of meeting. iii). 28th October. In case of CDC account holder : i).

Sign up to vote on this title
UsefulNot useful